U.S. bond traders focus on next week's Fed dot plot, focusing on the number of rate cuts this year and long-term interest rate expectations

U.S. Treasury traders have significantly lowered their expectations for the Fed's interest rate cuts this year since the beginning of the year. Traders will also get new clues next Wednesday (March 20) when policymakers release their latest benchmark interest rate expectations. After previously released CPI and PPI reports showed continued high inflation, the trend of the U.S. bond market is expected to depend largely on the Fed's updated dot plot. The median forecast by Fed policymakers in December pointed to three 25-basis-point interest rate cuts in 2024; as of Thursday, derivatives contracts reflected rate cuts slightly above that level. The question is whether the Fed will maintain that expectation or lower its rate cut expectations as prices continue to remain well above the 2% target.