Bond Traders Bet on Rate Cuts This Year After Central Bank Policy Shift
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Bond traders are positioning for central banks like the Fed to start cutting interest rates as soon as June after recent dovish signals.
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Bets on rate cuts backfired earlier when central banks remained focused on high inflation, but the outlook has shifted.
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Shorter-dated bonds that stand to benefit most from rate cuts are attracting interest from major money managers.
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Divergence in central bank policies could create opportunities, with the Fed seen having limited room to cut rates before the 2024 election.
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The yield curve has room to steepen from its inverted state as the expected easing cycle now looks more shallow.