Bond Traders Bet Big on the Fed Launching Into Rescue Mode
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Bond traders are betting that the US economy is slowing down and the Federal Reserve will need to start easing monetary policy to prevent a recession; The policy sensitive two-year Treasury yield has tumbled by half a percentage point to less than 3.9%, signaling concerns that the Fed is lagging in responding to the economic slowdown; Economists predict that the Fed will implement half-percentage-point moves at the September and November meetings; The benchmark 10-year yield has reached about 3.8%, the lowest since December, due to the rally in Treasury bonds; Berkshire Hathaway's decision to slash its stake in Apple by almost 50% has further dampened sentiment in the stock market; Futures traders are pricing in roughly the equivalent of five quarter-point cuts through the end of the year, indicating expectations for unusually large half-point moves over the course of the last three Fed meetings.

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