Uncertainty looms over US treasury market as Fed signals caution
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Investors who rode the explosive rally that elevated bond prices at the close of 2023 are now facing heightened risks as they reassess their bets on when the Federal Reserve might cut interest rates this year. Late last year, a surge in Treasury investments was fueled by the anticipation of a first-quarter rate cut by the Fed. However, the landscape is shifting following a blowout US jobs report and a cautious Federal Reserve message, warning that premature rate cuts could trigger an inflationary rebound. Yields on the 10-year Treasury have surged by 20 basis points from December's lows, prompting investors to reconsider their strategies. The uncertainty reflects in the futures market as well, with investors now assigning only a 20 percent chance of a Federal Reserve rate cut in March, down from 64 percent a month ago. The looming uncertainty is also fueled by expectations of nearly $2 trillion in new US government bond issuance this year. Despite the rise in yields, the stock market has remained resilient. The S&P 500 is up over 4 percent for the year and near a record high. Federal Reserve officials, projecting three quarter-point rate cuts this year, signal a cautious approach, adjusting the pace rather than ruling out rate cuts altogether.

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https://www.wionews.com/business-economy/uncertainty-looms-over-us-treasury-market-as-fed-signals-caution-688134