(Bloomberg) -- Interest-rate markets are no longer pricing in any chance of the Federal Reserve raising its policy benchmark by more than a quarter percentage point in March, as Russia’s invasion of Ukraine sparked doubts over the tightening outlook.
Swaps linked to the Fed’s March 16 meeting priced in just 24.5 basis points of tightening on Tuesday, suggesting traders see a quarter-point increase as all but certain but a half-point hike is off the table. The market had at one point in February indicated around 48 basis points of tightening for that meeting, suggesting that the bigger boost was more likely than not amid growing inflation pressures.
The re-pricing of the Fed outlook accompanied a wave of flight-to-quality demand for Treasuries as well as short-covering that lowered yields across the curve, with rates at the front end falling more than yields on longer-dated securities.
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