The US Treasury market is heading for its best weekly gain this month as economic angst reinforces bets on interest-rate cuts.
A Bloomberg gauge of US government debt is up 0.5% this week, bringing its return for the year to 2.7% — the best start since 2022. The latest leg follows the Federal Reserve’s March policy meeting, in which Chair Jerome Powell underscored the uncertainty around the outlook.
Traders are pricing in about 70 basis points of rate reductions by the end of the year, implying expectations for two quarter-point cuts in 2025. A third move is fully priced in by January 2026.
“The baseline is that inflation is transitory,” said Gang Hu, managing partner at Winshore Capital Partners. And “if the economy weakens, Powell’s not afraid of cutting rates. I won’t be surprised if they end up cutting three times this year.”
For bond investors who’d been piling into Treasuries over recent weeks,…
