Fed Chair Powell indicated that an increasing number of FOMC participants now view a rate hike as equally likely as a rate cut in the near term, signaling a shift in the central bank’s policy bias amid persistent inflation pressures. This repricing of rate expectations has tightened the correlation between inflation data and front-end Treasury yields, with 2-year notes particularly sensitive to shifts in policy rhetoric. The comment has reduced market pricing for imminent rate cuts, weighing on equity duration and strengthening the dollar via higher real yield differentials. Traders are now focused on the upcoming PCE inflation report as the next decisive catalyst for near-term policy direction.
- POWELL: NUMBER SEEING HIKE AS LIKELY AS A CUT HAS MOVED UP
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