The bond market has ended its long flirtation with the Federal Reserve cutting interest rates by half a point this month as resilient inflation and labor market data reinforce a measured course of action.
Swap traders have fully priced in a quarter-point reduction at the Fed’s policy announcement next week. The Treasury market ended lower Wednesday after a choppy session that started with a selloff in the wake of inflation data. The S&P 500 Index rebounded to close 1.1% higher after a volatile trading day. Stocks closely tied to the economy, including equipment rental companies and debt-heavy small caps, were among the most hit in trading before closing higher.