Bond Traders Are Betting for a Seventh Time on a Fed Shift to Rate Cuts
- Nearly 100 basis points of Fed cuts priced in the swaps market
- Expecting a pivot can make one less likely, says Deutsche Bank
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The bond market is betting on a “dovish pivot” for the seventh time since the Federal Reserve and other central banks embarked on a tightening cycle, raising the prospect of another false dawn, according to Deutsche Bank macro strategist Henry Allen.
US Treasury yields turned sharply lower and bonds rallied in the wake of last week’s Fed policy meeting, at which US central bank Chair Jerome Powell hinted that the current rate-hike cycle may be near an end. The buoyant mood gained further momentum from signs of a softening US jobs market.