Traders See Fed Waiting Until After Summer to Cut as Yields Soar
- Swaps pricing of rate cut moves to November from September
- Hot inflation data lofts 10-year yield to 2024 high 4.5%
Investors are signaling the Federal Reserve will cut interest rates just twice this year, starting in September, after a fresh round of hot inflation sent Treasury yields soaring to 2024 highs.
This turn of events was unthinkable at the start of the year, when the consensus view was for six cuts totaling 1.5 percentage points, beginning in March. Swap contracts currently anticipate the Fed’s rate will end the year only about 40 basis points lower than its current level of 5.33%. Options traders added bets on the Fed cutting just once this year, and Wall Street banks began revising their forecasts.