Powell's Hawkish Pivot: Rate Cut Expectations Plummet, U.S. Treasuries Sold Off, Yields Surge

March 19 — Federal Reserve Chair Jerome Powell’s latest hawkish remarks delivered a sharp blow to market expectations Wednesday, as he explicitly stated the central bank will hold off on rate cuts until inflation sees a **significant decline** — dashing investors’ hopes of earlier easing. U.S. Treasuries sold off sharply in response: - The 2-year yield jumped to ~3.78%, a 7-month high; - The 10-year yield rose to 4.27%. Rate-cut bets cooled rapidly: The odds of at least one cut this year are now near a **coin flip**, with some market chatter even turning to potential rate hikes. Analysts note Middle East tensions have pushed oil prices higher, amplifying inflation pressures and prompting the Fed to take a more cautious stance. Earlier bets on multiple cuts have largely reversed, driving heavy volatility in the bond market.