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Bond Traders Boost Bets on a Fed Cut This Year After Ceasefire

Alice Gledhill, James Hirai, Masaki Kondo
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Bond traders increased bets on a 2026 Federal Reserve rate cut after a US-Iran ceasefire eased geopolitical tensions, triggering a sharp drop in oil prices and reducing inflationary pressures. Treasury yields fell as government debt markets rallied globally, reversing losses incurred since the conflict began on February 28, which had previously driven energy costs higher. The oil price surge during the war had threatened to fuel inflation, potentially forcing central banks to delay rate cuts or even hike rates further to counter rising costs. The ceasefire’s impact on energy markets immediately lowered inflation expectations, prompting traders to price in higher odds of monetary policy easing later this year. Analysts now anticipate the Fed may pivot toward cuts sooner than expected, as stabilizing oil prices reduce upward pressure on consumer costs and economic uncertainty.
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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Bond traders boosted wagers that the Federal Reserve will lower interest rates this year as a US-Iran ceasefire sent oil tumbling.Treasuries rallied along with other government debt markets, paring losses since the war began Feb. 28. The energy price surge it caused threatened to stoke inflation and cause central banks either to delay interest-rate cuts or to raise rates.

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Source: Bloomberg

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