Stocks and Bonds Rally as Traders Bet That Fed Hikes Are Done
- Fast-money quant funds are paring their big bearish wagers
- Stock traders embrace economic cooling while bonds stage rally
Wall Street bears are capitulating as slowing inflation forces a hard pivot.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
Professional traders entered November wagering Jerome Powell’s campaign to tame inflation was a long way from being won. Now they’re being forced into risky bets that the battle is over.
First, it was the Federal Reserve chair’s dovish turn Nov. 1, when Powell conceded predictions for future interest-rate hikes weren’t written in stone. Then, an unexpected cooling in consumer-price increases Tuesday added fuel to the biggest three-week rally this year, judging by cumulative gains in a pair of popular ETFs tracking US stocks and long-dated Treasuries.