Investors wary of government debt after Wednesday's rate hike by the Federal Reserve was accompanied by resolutely hawkish rhetoric from Fed Chair Jay Powell.
Short-duration bond yields moved to fresh multi-year highs on Thursday as traders priced in the prospect of a resolutely hawkish Fed.
“Powell, like a sawbones of yesteryear warning a patient the leg will have to come off to prevent the spread of gangrene, noted there was no painless way to bring inflation under control,” Mould added. The upshot is that the market now reckons there is an increased chance that higher Fed funds rates will cause an economic slowdown.
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