DXY 1D

‘Fed-is-going-to-stop-soon’ trade peters out in stocks, and bonds amid the prospect of at least one more rate hike


A combination of hawkish remarks by a pair of Federal Reserve officials, solid bank earnings reports, and a rebounding consumer-sentiment reading on Friday are among the factors contributing to another abrupt readjustment in the financial market’s thinking about the path of interest rates.

The sudden readjustment dented the popular view that the Federal Reserve might be approaching the end of its yearlong rate-hike cycle. All three major U.S. stock indexes DJIA, -0.18% SPX, -0.21% NAS, -0.35% finished lower, while Treasury yields jumped — led by a 39.5-basis-point rise in the 1-month T-bill rate. The U.S. Dollar Index DXY, +0.56% jumped 0.5%. And Fed funds futures traders boosted the chances of Fed rate hikes in May and June while paring their expectations for rate cuts later this year.