Reuters

Bond markets don’t buy hawkish Fed’s view on how high U.S. rates can go

The Federal Reserve’s more hawkish turn this week came amid heightened worries about economic recovery and inflation, but it has barely changed the bond market’s view that short-term interest rates could top out below the U.S. central bank’s estimated peak. Current betting even has rates staying below the inflation level the Fed projected over the next few years. Since the Federal Open Market Committee released its policy statement Wednesday, markets have priced the terminal rate where policy rates will stop going up, at between 1.4% to 1.7%, according to eurodollar futures’ view of U.S. rates in three years.

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