Bond Traders Make Risky Bets on Neutral Rate ‘No One Knows’
- Estimates on neutral are key to projecting depth of Fed easing
- Uncertainty about the rate contributes to bond volatility
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On Wall Street’s bond desks, everyone, it seems, has an opinion on the neutral rate. It’s 3.3%. No, it’s 4.5%. Actually, it’s 2.4%. And on and on, all day long, five days a week.
The truth is, as the bond veteran Greg Peters puts it, “no one knows what neutral is.”