Bond Market Caught Between Fears of US Debt Default, Rate Hikes


  • A Fed pause in June, once seen as certain, no longer assured
  • Debt-ceiling talks may prove key as risk of default lingers

By Michael Mackenzie and Liz McCormick

Bond traders are losing faith that the Federal Reserve is done tightening monetary policy and will ride to the rescue with rate cuts this year. 

The latest shift in sentiment — which during the past week put the odds of a quarter-point rate hike next month as high as 40% — will face a test in the coming week from slew of data that will gauge the strength of the economy.

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