Bond Market Adds to Fed Rate-Cut Bets Despite Inflation Uptick
- Expectations mount for monetary easing beginning in May
- Consumer prices rose more than anticipated in December
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Bond traders shrugged off higher-than-anticipated inflation readings for December, pricing in a larger total amount of Federal Reserve interest-rate cuts this year beginning in May.
While yields surged immediately after the consumer price index showed prices rose more than economists expected, the moves were sustained only until an auction of 30-year bonds cleared the market several hours later. In US afternoon trading, swap contracts that anticipate what the interest rate targeted by the Fed will be in the future repriced to lower levels.