Traders Pull Back Bets on Fed Interest-Rate Cuts Before July
- Market-implied odds of rate cuts in May or June tumble
- Treasury yields rise to highest levels so far this year
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Traders ratcheted down their expectations for a Federal Reserve’s interest-rate cut before July, and Treasury yields soared, after a report showed that inflation remains sticky in the US.
Swaps contracts referencing the US central-bank policy meetings — which as recently as mid-January fully priced in a rate cut in May and 175 basis points of easing by the end of the year — were roiled. The odds of a May cut dropped to about 32% from about 64% before the inflation data, with fewer than 90 basis points anticipated this year. The two-year Treasury yield rose as much as 17 basis points to 4.64%.