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Traders Bet On Fed Rate Cuts After Trump Tariff Turmoil

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April 7, 2025

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US government bonds tumbled Monday, erasing a portion of their biggest weekly advance since August, amid signs investors were momentarily regaining their appetite for risk.

The historic selloff lifted yields across all maturities by at least 20 basis points during the session, with those on 30-year bonds higher by nearly 23 basis points in late trading — set for the biggest one-day increase since March 2020.

“We are in this environment where a little bit of good news has a disproportional environment on asset prices,” said Ian Pollick, head of fixed income, commodities and currency strategy at CIBC. “We saw some potential rebalancing of the markets today, with the equity market starting to improve, and it had the first impact on displacing bonds.”

Traders’ bets on how much the Federal Reserve will lower interest rates this year fluctuated between three and five quarter-point cuts. Four reductions are now reflected in overnight interest-rate swaps this year, with the first fully priced in for June. A May reduction is seen as a coin toss.

Professor of Public Policy and Economics at the University of Michigan and former Member of the White House Council of Economic Advisers Betsey Stevenson explains the impact that Trump's tariffs plans would have on the US economy if fully implemented.

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Guests & Subjects Covered

Ian PollickCIBC WeFederal ReserveJune A MayPublic PolicyWhite House CouncilEconomic Advisers Betsey StevensonBloomberg Live

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Traders Bet On Fed Rate Cuts After Trump Tariff Turmoil · Bloomberg Podcasts · Sentinel