Behind the move: deep skepticism among many investors that the Federal Reserve will raise short-term interest rates as high as they did in the last economic expansion—a level that was itself the lowest peak for rates over the past seven decades.
Fed Chairman
Jerome Powell
sent shudders through markets last week when he didn’t rule out relatively aggressive steps to help bring down inflation, such as rate increases at consecutive meetings or a half-a-percentage-point increase at a single meeting.
Bond investors, though, have responded by lifting their expectations for the speed of rate increases, not the total number. The yield on the benchmark 10-year U.S. Treasury note, which loosely reflects expectations for short-term rates over the next decade, settled Monday at 1.780%—still up from 1.496% at the end of December but down from…
