Bond Bulls Fixated on Fed-Rate Cuts Risk Getting Smacked Around
- Swap traders are resolute on bets for big 2024 Fed reductions
- 10-year Treasury yields find center of gravity at key 4% mark
The Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Valerie Plesch/BloombergThis article is for subscribers only.
Bond traders are growing more convinced that US yields are heading lower as they bet on a series of Federal Reserve interest-rate cuts, yet the path to cheaper borrowing costs is set to be extremely bumpy.
Having endured some major swings last year, US Treasuries rallied into the end of 2023 as investors latched on to signs inflation was cooling and central bankers opened the door to rate-cut speculation. While markets have been choppier to start the year, traders have become only more resolute that substantial monetary easing is in store, and soon.