Traders Pricing Seven Fed Hikes This Year as Global Bonds Tumble
- Fed officials push back on expectations of a super-sized hike
- Australia, New Zealand yields highest in more than 2 1/2 years
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Global bond yields soared as traders wagered that the Federal Reserve will raise policy rates by 175 basis points by the end of the year, even as officials pushed back against expectations of a super-sized hike next month.
Overnight index swaps on Friday showed traders expect the Fed’s main rate to rise to 1.84% after the December meeting, from the effective rate of 0.08%. Goldman Sachs Group Inc’s economists are now calling for seven consecutive quarter-point hikes, up from the five they’d seen earlier. Two-year Treasury yields resumed gains as cash trading opened, shrinking the gap over 10-year yields to the flattest since April 2020.