Treasury bonds surged, pushing key two-year yields to their lowest level this year, as investors bet the collapse of three US lenders will compel policymakers to halt interest-rate increases.
Swaps now show a less than one-in-two chance that the Federal Reserve will implement another quarter-point hike this cycle. Yields on two-year Treasury notes — the most sensitive to changes in policy — fell as much as 60 basis points to less than 3.99%, the lowest since October.
The three-month London interbank offered rate for dollars, a key benchmark, dropped by 27 basis points, the most since March 2020. The dollar also declined.
