Short-End Bonds Rally as Fed Reassures Market of Cuts in 2024
- The central bank’s dot plot confirmed three cuts this year
- Long-dated debt slipped as dots showed higher rates in future
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Short-maturity Treasuries jumped after Federal Reserve policymakers stuck with their forecast for three quarter-point interest-rate cuts this year, putting to rest market concern that the central bank would crimp plans to ease monetary policy.
Yields on two-year debt briefly declined to session lows after the Fed’s policy announcement Wednesday, and traders now see about 77 basis points of cuts this year, up from 73 before the release. Policy makers’ revised rate forecasts showed a median of 4.625% for the end of this year, unchanged from December, while projecting higher rates in the future. Longer-dated Treasuries fell in response.