When the U.S. Federal Reserve cut interest rates last month for the first time i...
NEW YORK - When the U.S. Federal Reserve cut interest rates last month for the first time in more than a decade, it signaled that further reductions in borrowing costs might not be needed. Bond markets vehemently disagree.
Fears are also rising the Fed may not only be behind the curve in cutting rates, but that central banks may be running out of ammunition to stimulate growth as countries offset each other’s attempts to boost growth with looser fiscal policy. The inversion rattled investors already worried that a U.S.-China trade war might trigger a global recession and kill off a decade-long bull market on Wall Street. Major U.S. stock indexes were down about 2%.
The U.S. central bank looks better placed to ease conditions than many of its counterparts as it still has room to cut rates. Bond markets are priced for two additional U.S. rate cuts this year and a third in the first half of next year.
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