Against the odds

In our ECP house-view we had formulated the opinion that, by the end of last year, investors got too optimistic on future rate cuts by the Fed and that the bond market had gotten slightly ahead of itself. That proved correct as for example the US 10 year bond government bond yield is up from 3.88% to 4.32% and market implied odds for future rate cuts have fallen: the probability of a Fed rate cut in May has fallen from 100% beginning of January to 29% currently. To us, this is a sign that it is time to revisit bonds.