Traders in government bonds, who predicted six of the last seven recessions, say America's Federal Reserve will lower interest rates again before the end of the year as the US economy comes to a standstill.
Since the Fed last week lopped half a percentage point off the central bank's target for overnight lending between banks - the first orchestrated decline in so-called federal funds rate since 2003 - traders have pushed the yield on Treasury two-year notes to almost three quarters of a point below the designated 4.75 per cent funds rate. In the three previous occasions during the past 20 years when that has happened, policymakers have cut borrowing costs.
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