US Investors Reduce Expectations Over Fed Rate Cut in 2024

A sell-off in the U.S. government bond market is gaining momentum, fueled by a robust economy that diminishes expectations for immediate interest rate cuts from the Federal Reserve.

Investors have significantly reduced their expectations for Fed rate cuts in 2024 over the past month, driven by strong job growth and persistent inflation, which have made the Fed cautious about easing monetary policy prematurely.

This trend has led to losses in bonds, complicating the outlook for investors who had anticipated that Treasuries would rise as the Fed lowered borrowing costs. Yields on the 10-year Treasury, influenced by interest rate expectations, have surged to 4.35%, the highest level since November.

A series of statements from Fed speakers in recent weeks have echoed this cautious stance, further contributing to the bond market sell-off.

Source: Reuters