,At issue is the expected high-water mark for the Fed’s rate hiking cycle. That number has fluctuated over the last several weeks, ramping up Treasury market volatility to its highest level in more than two years as investors shift back and forth between bets on surging inflation and an economic downturn caused by the Fed’s aggressive monetary policy.博彩平台大全（www.99cx.vip）是一个开放皇冠体育网址代理APP下载、皇冠体育网址会员APP下载、皇冠体育网址线路APP下载、皇冠体育网址登录APP下载的官方平台。博彩平台大全上最新博彩平台登录线路、博彩平台代理网址更新最快。博彩平台大全开放皇冠官方会员注册、皇冠官方代理开户等业务。
NEW YORK: Bond traders expect the gyrations convulsing U.S. Treasuries to continue in the second half of 2022 as investors challenge the Federal Reserve’s projections for how far it will tighten monetary policy to quell the worst inflation in decades.
At issue is the expected high-water mark for the Fed’s rate hiking cycle. That number has fluctuated over the last several weeks, ramping up Treasury market volatility to its highest level in more than two years as investors shift back and forth between bets on surging inflation and an economic downturn caused by the Fed’s aggressive monetary policy.
The latest twist: While the Fed’s projections show rates peaking in late 2023, investors are increasingly betting that policymakers will stop tightening early next year before easing monetary policy in the face of a looming economic slowdown.
That has helped send Treasury yields, which move inversely to prices, lower over the last week, lending support to a rally in U.S. stocks that saw the S&P 500 rise 4.5% from its lows. Benchmark 10-year Treasury yields reached a high of about 3.5% earlier this month and now stand at around 3.1%.
With markets still parsing how much the Fed’s 150 basis points of already-delivered rate hikes have impacted consumer prices, investors see few signs that the swings in Treasuries will subside anytime soon, adding more risk to a year that has already seen U.S. government bonds notch the worst start in their history.
The ICE MOVE Index, which measures expectations of bond market volatility, recently hit its highest levels since March 2020.
“Volatility and inflation are linked tightly together right now," said Pramod Atluri, Fixed Income Portfolio Manager at Capital Group.
"No one really knows how far demand has to fall in order to bring inflation back down to comfortable levels. This makes predicting the Fed’s response really tricky," he said.
The Fed, criticized for moving too slow to address burgeoning inflation, has hurried to ramp up its monetary policy response, delivering a jumbo, 75-basis point rate increase earlier in June and ramping up expectations of more big moves to come.
Fed Chairman Jerome Powell on Wednesday reiterated the central bank's commitment to fighting inflation, acknowledging the risk of slowing the economy more than needed.
The Fed's so-called dot-plot, which shows policymakers’ projections for where rates are headed, shows a median interest rate of about 3.8% next year, decreasing to around 3.4% in 2024.