By Davide Barbuscia
NEW YORK (Reuters) – The Federal Reserve’s aggressive start of the easing cycle has rekindled inflation worries in the U.S. bond market, as some investors fear looser financial conditions could re-ignite price pressures.
Yields on longer-dated Treasuries that are most sensitive to the inflation outlook have risen to the highest since early September, with some investors worried that the Fed’s shift in focus from beating back inflation to protecting the job market could allow for a rebound in price pressures.
“I think there are questions around how quickly inflation will be able to get to the Fed’s target if we’re in a cutting environment, and if we’re in an environment where the Fed is saying we want to support the labor market before the labor market gets weak,” said Cayla Seder, macro multi-asset strategist at State Street Global Markets. She expects long-term yields, which rise when prices fall, to climb further…
