US 2s daily
The market is growing more dovish on the outlook for rates.
Two-year yields shown here are on track for the lowest close since September when the market was wrapped up in the idea of rate cuts and job losses.
It’s an interesting day to look at the Fed funds curve because there is a meeting scheduled for April 29, 2026, which is exactly a year from today. The pricing for that meeting is at 3.07%, which is 125.8 bps below current pricing and would mean five cuts from the current 4.25-4.50% range.
I believe the market is pricing in an increase of a recession as economic data continues to deteriorate. Today’s JOLTS data worsened and the consumer confidence report missed estimates. For now the poor data remains from the ‘soft’ side but eventually the uncertainty of tariffs will hit investment spending.
What’s not clear is whether the Fed will be able to prevent a deeper recession with fast rate cuts due to inflationary pressures.
Tomorrow we get the first look at Q1 GDP and it could be negative if the Atlanta Fed tracker is to be believed. Polymarket’s recession odds also continue to climb and are back to before Trump walked back reciprocal tariffs.
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