Fed Rate Cut Expectations Clash with Bond Market Reality

Wall Street predicts a 25 basis point Fed rate cut in just 15 days, but the bond market is defying expectations. Instead of falling in line with textbook predictions, yields are surging, pushing long-term bond prices to levels not seen since the aftermath of the 2008 financial crisis. While traders anticipate rate cuts for 2025, even a potential 75 basis points of cuts this year is just a base case scenario. However, none of these adjustments are translating into investor optimism.