-- Bond traders who have come to terms with the prospect of higher-for-longer interest rates through 2024 are looking toward this week’s Federal Reserve meeting for clues on how to game out 2025 and beyond.Investment Bank Moelis Probes Incident After Video of Employee Appearing to Punch WomanTreasuries inched higher on Tuesday as investors look to parse policymakers’ latest quarterly economic and interest rate projections — known as the dot plot — on Wednesday.
Jean Boivin, head of the BlackRock Investment Institute said the bond market should be wary of anticipating that “a delayed easing cycle” will finally arrive given the likelihood that inflation averages above the Fed’s 2% target. He said the bond market faces the prospect of “adjusting to the realization that this is a shallow cutting cycle.”
“The debate on whether policy is restrictive or not will continue as the data is mixed on the whole,” said Priya Misra, portfolio manager at J.P. Morgan Asset Management. “There is strong labor supply but consumer confidence and hiring intentions from small business is weakening.” For that reason, he favors a so-called steepener trade — where short-term yields decline faster than those on longer-term debt — although that positioning has failed to work lately. “Eventually we think the chickens will come home to roost there and you’ll see some steepening of the curve,” he said.
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