Bond Market at Risk of Third Annual Loss Needs a Dot-Plot Rescue

Federal Reserve policymakers’ updated forecasts for their benchmark interest rate are looming as a key potential decider for a US Treasuries market at risk of a third straight year of losses.

The two key questions for the dot plot are whether policymakers retain expectations for one more 25 basis-point rate hike by year-end , and how much easing are penciling in for 2024 .

“The market has a strong view that 3.5% is the new floor,” said John Bellows , portfolio manager at Western Asset Management . That suggests, over time, investors “only see the Fed eventually cutting down to 3.5% .” --With assistance from Steve Matthews . Most Read from Bloomberg Businessweek 2023 Bloomberg L.P ..