For over a year, bond traders have been whipsawed by uncertainty about how high the Federal Reserve will push interest rates.
Bond-market titans BlackRock Inc., Pacific Investment Management Co. and Vanguard Group Inc. are warning that recent violent swings in US Treasuries are only the beginning of a new era of volatility that’s here to stay until central banks conquer inflation.
Jarred by daily double-digit moves in Treasury yields, bond investors are bracing for at least another year of rocky trading, abandoning hopes that in 2023 the market would return to normality.
The bond market is doubling down on the prospect of a US recession after Federal Reserve Chair Jerome Powell warned of a return to bigger interest-rate hikes to cool inflation and the economy.
A swift reassessment of how high the Federal Reserve will raise interest rates this year has rocked the bond market in recent weeks.
Slowly but surely, bond haters are vanishing across Wall Street — even as fresh market havoc remains a distinct possibility next year if still-raging inflation forces the Federal Reserve to ramp up policy tightening anew.
Wall Street is finding a reason to keep plowing into the bond market, even with a Federal Reserve that’s still far from declaring victory in its war against inflation.
Week by week, the bond-market crash just keeps getting worse and there’s no clear end in sight.
Bond traders are girding for the risk that Federal Reserve Chair Jerome Powell is ready, willing and able to plunge the US into recession to get the inflation bogey under control.
For all the volatility whipsawing the US bond market, traders are showing increasing confidence that the alarm bells warning of a recession will only get louder.
The U.S. bond market reeled further on Tuesday, extending Monday’s declines after Federal Reserve Chair Jerome Powell’s aggressive rate hike comments drove yields on short-dated Treasuries to one of their biggest daily jumps of the past decade.
Wall Street likes to warn that past performance doesn’t guarantee future results, but when it comes to the traditional 60/40 mix of stocks and bonds, it kind of has. Persistent inflation could bring that to an end.
