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Traders Price Deeper Fed Rate Cuts With Cycle Peaking Mid-2023
Traders are upping their bets that Federal Reserve policy makers will be forced to cut rates from the end of 2023 onwards -- after tightening policy in earnest with a supersized rate hike in the coming months. In the eurodollar futures markets, the spread between the December 2023 and December 2025 contracts has dropped further into negative territory on Monday -- implying a near-25 basis point cut in the federal funds benchmark over this 24-month timeframe. At the same time, traders in the front-end of the U.S. rates market are ever-more convinced that the central bank’s tightening cycle will be swift -- but over ... (full story)