Bond Traders Expect Much Deeper Interest Rate Cuts Than Projected
Portfolio Pulse from Michael Juliano
Bond traders expect the Federal Reserve to implement much deeper interest rate cuts than the agency has forecast, predicting a 3 percentage point reduction by March. This contrasts with the Fed's projection of a 25 basis point cut by the end of 2024. The iShares Core U.S. Aggregate Bond ETF (AGG), Vanguard Total Bond Market ETF (BND), and Vanguard Total International Bond ETF (BNDX) saw slight declines in early-afternoon trading.
June 26, 2024 | 6:07 pm
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NEGATIVE IMPACT
iShares Core U.S. Aggregate Bond ETF (AGG) slipped 0.36% in early-afternoon trading as bond traders predict deeper Fed rate cuts than forecast.
The expectation of deeper interest rate cuts by bond traders suggests a potential decrease in bond yields, which negatively impacts bond prices and ETFs like AGG.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Vanguard Total Bond Market ETF (BND) declined 0.40% in early-afternoon trading amid predictions of deeper Fed rate cuts.
Similar to AGG, BND is affected by the expectation of deeper interest rate cuts, leading to a potential decrease in bond yields and ETF prices.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Vanguard Total International Bond ETF (BNDX) slid 0.43% in early-afternoon trading as bond traders expect deeper Fed rate cuts.
BNDX, like AGG and BND, is impacted by the expectation of deeper interest rate cuts, which could lead to lower bond yields and ETF prices.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80