Elevated interest rates have been a large contributor to the higher inputs faced by producers, and given today’s sell-off coupled with Friday’s jobs number, bond traders are betting for an emergency cut before September.
Fed Chair Jerome Powell has said rates could start coming back down at next month’s meeting. However, traders now say fears of a recession are real, and they see a 60 percent chance of an emergency cut within a week. That is fueling one of the biggest bond market rallies since the banking crisis in March 2023.
