Bond traders are betting on the biggest Fed shift in decades on credit risk

New fears of a recession-inducing credit crunch are spurring bond bulls to step up their bets that the Federal Reserve will embark on its most abrupt policy shift in nearly four decades.

Just minutes after Wednesday’s Federal Reserve rate hike, traders intensified their long-held bets on impending cuts as renewed jitters at regional banks sent tremors across Wall Street. At its most anxious markets priced in a policy about-face as soon as July.