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Bond Traders Downgrade 2023 Fed Rate-Cut Odds to a Coin Toss
Bond traders no longer view the odds of a Federal Reserve rate cut this year as better-than-even. As recently as mid-January it was an article of faith that the Fed’s eight rate increases in the past year had sown the seeds of a recession that would require the central bank to reverse course. Since then, persistently strong employment data and sticky inflation have traders looking for a higher peak in the central bank’s policy rate and a prolonged stay at that level. This is evident in the implied interest rates of futures contracts linked to the Secured Overnight Financing Rate, a short-term benchmark influenced ... (full story)