Bond Market Seems to Approach Turning Point Amid Indications Fed Nears End of Rate Cutting
NEW YORK -- Amid signs that the Federal Reserve is near the end of its aggressive rate-cutting campaign, the bond market appears at a turning point.</br></br>Investors widely expect Fed policy makers, who meet again tomorrow, to cut interest rates once more. But what happens after that is less clear.</br></br>Many in the market believe any rate reduction tomorrow could be the last the Fed makes in this interest-rate cycle. They cite evidence that consumer sentiment, wages, retail sales and the equities markets either remain fairly strong or are recovering from weakness last winter.</br></br>The implications are crucial to the Treasurys market, which staged a yearlong rally as the economy and the stock market began to languish and as the Fed cut short-term interest rates by two percentage points in the first four months of this year.</br></br>If interest rates are near their lows of this cycle, and if the economy finally is stirring in response to the Fed's strong medicine, the outlook for Treasurys is considerably less bright, analysts note.