July 17, 2024

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Bond Market Euphoria Shifts to Debate Over How Low Fed Will Need to Go

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A torrid bond-market rally shows traders are convinced the Federal Reserve’s rate-rising cycle is over. The debate now turns to when central bankers start cutting, and by how much.

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(Bloomberg) — A torrid bond-market rally shows traders are convinced the Federal Reserve’s rate-rising cycle is over. The debate now turns to when central bankers start cutting, and by how much.

At issue is whether the economy settles in for a soft landing or spirals into something worse. Both scenarios suggest rate cuts are coming, possibly as soon as March. Current market expectations call for at least 1.25 percentage points of easing next year, a trend that would seem to clear a path for lower yields and an extended rally. 

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Bloomberg News

2023-12-03 15:18:18

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