Wall St Week Ahead: Plunging bond yields boost stocks' allure ahead of Fed meeting

U.S. government bond yields fell steeply this week, with some durations marking their biggest drops in decades, as investors bet the Federal Reserve would likely curb its aggressive rate hike trajectory to avoid exacerbatingThe volatility in fixed income markets has unsettled investors, and falling yields can reflect expectations that the Fed will cut rates because of a hit to growth.

While the banking crisis has stirred recession fears, "it's the interest rate move that's a ... tailwind for stocks right now," said Charlie McElligott, managing director of cross-asset macro strategy at Nomura.Federal Reserve meeting For now, futures markets indicate that investors are assigning a 60% probability of a 25 basis point rate increase at the Fed's March 21-22 meeting, with rate cuts to follow later in the year - a sharp turnaround from the hawkish expectations that prevailed earlier this month.

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