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Investors re-think rate cut odds

Sep. 13, 2019 3:40 PM ETAGG, PAI, BND, PTY, BTZ, BHK, PCM, RCS, JHI, SCHZ, BOND, DBL, IUSB, FBND, HIPS, SPAB, AGGYBy: Stephen Alpher, SA News Editor89 Comments
  • We can probably begin thinking about using the word "crash" to describe the action in the bond market over the past two weeks. The 10-year Treasury yield is up another 12.5 basis points today to 1.90% - that's a 45 basis point move since Labor Day.
  • Checking the short end, traders are quickly bailing out of long positions in short-dated Eurodollar and Fed Funds futures. A 25-basis point rate cut this month was a near-metaphysical certainty just days ago (and a 50-basis point cut was under serious debate), but the betting now says there's more than a 20% chance of no move at all.
  • The Fed's meeting begins next Tuesday, with the decision to be announced Wednesday afternoon. Should be fun.
  • Broad U.S. fixed-income ETFs: PTY, AGG, BND, BOND, RCS, SCHZ, BTZ, PCM, DBL, FBND, IUSB, BHK, SPAB, JHI, AGGY, HIPS, PAI

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