Rate Cuts On Ice As Inflation Expectations Surge At The Short End

Markets now assign low odds of a Federal Reserve rate cut this year as inflation worries persist; that repricing is leaving much of the fixed-income market (via a set of ETFs) underwater year-to-date through Mar. 24. Expect continued pressure on bond prices and duration-sensitive strategies if inflation remains elevated and rate-cut expectations stay suppressed.

Analysis

Markets now assign low odds of a Federal Reserve rate cut this year as inflation worries persist; that repricing is leaving much of the fixed-income market (via a set of ETFs) underwater year-to-date through Mar. 24. Expect continued pressure on bond prices and duration-sensitive strategies if inflation remains elevated and rate-cut expectations stay suppressed.