Traders no longer anticipate the Fed will cut rates in 2026, even to "hedge" hikes

BlockBeats News, March 19th, US Treasury prices fell as traders no longer see a possibility of a rate cut in the US this year after the Bank of England indicated it was prepared to take action to address inflation. This move led to an increase in yields across all maturities, with the yield on the two-year US Treasury, most sensitive to Fed policy changes, rising by 13 basis points to 3.9%. Bond traders unwound expectations of a US rate cut this year, with some even starting to hedge for a possible hike in the coming months.

Tom Di Galoma, Managing Director at Mishler Financial Group, said, "All of this was driven by the Bank of England's rate decision as the market is currently expecting a 50 basis point hike by the bank in 2026. The European bond market is experiencing a sharp decline, which has also pushed up US yields." He noted that fund flows are determined by a lack of buyers, "primarily driven by selling pressure," with market sentiment mainly influenced by expectations of a prolonged conflict. "There is now a belief that this Iran war may last for several months rather than weeks." (Golden Finance)