US government bonds tumbled on Monday, erasing a portion of their biggest weekly advance since August, as investors regained their appetite for risk. The historic selloff lifted yields across all maturities by at least 20 basis points.
Traders’ bets on the Federal Reserve’s interest rate cuts this year fluctuated between three and five quarter-point reductions. However, these bets have crumbled since last week’s data showed a slight improvement in the equity market.
The uncertainty surrounding the US administration’s tariffs agenda and the ongoing trade talks with Japan triggered sharp swings in the bond market. Some traders believe that the Fed may need to cut rates if growth turns “pear-shaped.”
Major banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., have revised their forecasts, predicting three reductions this year for both the Federal Reserve and the European Central Bank.
Governments around the world are rushing to negotiate with US officials to reduce the tariffs imposed on their exports, leaving markets in freefall as traders price in the uncertainty of whether deals can be struck.
Source: https://finance.yahoo.com/news/us-bonds-stumble-traders-debate-144943042.html