Market Extra: Fed finds itself in a ‘tough spot’ as 10-year Treasury yield slides to 21-month low

The Federal Reserve is walking a tightrope as the bond market cranks up the pressure on monetary-policy makers to ease benchmark borrowing costs.

Tuesday’s stock market rally (and gains for global debt prices) demonstrated the heightened expectations for more dovish policy from the Fed, underlining its difficult position as analysts say the central bank is unlikely to cut rates immediately with economic data yet to point to an imminent downturn. The more likely scenario would be for the rate-setting Federal Open Market Committee to make use of the two-day meeting that started Tuesday to open the door to an interest-rate cut later this year, they said.

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