Powell Pivot: Rate Cut Expectations Plummet, U.S. Treasuries Sold Off, Yields Surge
BlockBeats News, March 19th, Federal Reserve Chairman Powell's latest "hawkish" rhetoric dealt a heavy blow to the market's expectations. After staying put for the second time in a row, Powell clearly stated that the Fed will not cut interest rates until it sees a significant drop in inflation, directly shattering market fantasies. As a result, U.S. Treasuries faced sell-offs:
The 2-year Treasury yield rose to around 3.78%, hitting a 7-month high;
The 10-year yield rose to 4.27%.
Interest rate market expectations quickly cooled, with the probability of one rate cut this year now close to a "50-50" chance, and even discussions about another rate hike emerging.
Analysts believe that the Middle East conflict has driven up oil prices, exacerbating inflationary pressures and prompting the Fed to shift to a more cautious stance. Previous market bets on multiple rate cuts have been largely reversed, leading to significant bond market volatility.
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