Reuters Poll: Powell to Cut Rates for First Time as Fed Chair, Two Cuts Expected This Year

BlockBeats News, February 12th, a Reuters survey shows that the long-end U.S. Treasury yield is expected to remain stable in the short term, but due to concerns about inflation and Federal Reserve independence, it is expected to trend higher later in the year; the short-end yield is expected to edge lower due to bets on rate cuts. At the same time, nearly 60% of bond strategists (21 out of 37) believe that the massive issuance of U.S. treasuries in the coming years to finance Trump's tax cuts and spending plans will make it unfeasible for the Federal Reserve to significantly reduce its $6.6 trillion balance sheet.

Another Reuters survey shows that the Federal Reserve is expected to implement two rate cuts later this year, with the first one in June when Powell takes over as Fed chair. The interest rate-sensitive 2-year U.S. Treasury yield is expected to decrease from the current 3.50% to 3.45% at the end of April and 3.38% at the end of July. The median forecast in the survey also indicates that the benchmark 10-year U.S. Treasury yield is expected to rise to 4.29% one year later, higher than the previous month's forecast of 4.20% (FX Street).