Burned Before, Bond Markets Resume Rate-Cutting Trades Worldwide
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Bond traders are cautiously reloading wagers that burned them just weeks ago as the Federal Reserve and key global peers finally appear set to begin reducing interest rates as soon as June. The prospect of lower rates is boosting the allure of shorter-dated obligations due in around five years or less. Investors are feeling a flicker of what unfolded in late-2023 when the Treasury market rallied into year-end as expectations swept global markets that policymakers would reduce rates early in 2024. Rates traders are leaning toward June as the start of the Fed easing cycle, after entering the year banking on a March kickoff. For all of 2024, they see a bit more than Fed officials’ median forecast of 75 basis points of reductions. Among the major central banks, the Bank of Japan stands apart, with economists projecting it will lift rates again later this year, after scrapping its easing program last week.

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https://www.bloomberg.com/news/articles/2024-03-24/burned-before-bond-markets-resume-rate-cutting-trades-worldwide