Bond Market Dares Fed to Defy It After Bloody Week for Investors

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(Bloomberg) — Bond traders are looking to the Federal Reserve to support the hawkish shift that just drove parts of the global bond market to one of its wildest weeks in decades. In a span of a few days, the view that some major central banks will be slow to raise rates shattered into pieces. Short-term yields from Canada to Australia jumped the most since the 1990s, catching even some of the best money managers flat footed, as policy makers shifted gears to move more firmly against inflation once seen as likely to be transitory. At the same time, long-term rates slid — a signal that aggressive policy moves are likely to slow the pace of economic growth.The capitulation of some central banks has emboldened U.S. traders, who are betting the Fed will start backing away from its mantra that the acceleration in consumer-price gains would be a short-lived side effect of the Covid pandemic. And as traders shift their attention away from officials in Ottawa…

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