Short-Term US Bonds Rise as Traders Boost Bets on 2025 Rate Cuts

Short-term Treasuries rose and traders boosted their expectations for Federal Reserve interest-rate cuts later this year after the US economy contracted for the first time since 2022.

The gain in two-year notes on Wednesday pushed yields lower by about four basis points after data showed a decrease in US gross domestic product, more moderate consumer spending and tameness in the Fed’s preferred gauge of inflation. In the swaps market, traders increased their wagers on four quarter-point reductions by the end of the year, with the first fully priced in for July.