The Middle East war intensifies U.S. inflation concerns, bond traders reduce bets on interest rate cuts
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In the United States, the spread between the December 2026 and December 2027 contracts tracking the Secured Overnight Financing Rate (SOFR) fell to negative 15 basis points on Tuesday, marking a new low for this cycle. The spread turned negative last week. Just a few weeks ago, investors were focused on the deflationary impact brought by artificial intelligence (AI) and the cooling job market, at which time the market had already priced in several rate cuts by the Federal Reserve this year. Expand
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