Market Uncertainty on Fed Rate Expectations Ahead of FOMC Meeting
Fed Rate Expectations Create Market Uncertainty
Fed rate expectations have investors split ahead of the FOMC meeting, creating unprecedented uncertainty. The market is assessing potential rate cuts amid mixed economic signals. Principal Asset Management's Seema Shah highlights this unusual situation.
Market Analysis
The market has been trying to discern whether the Fed will lower its benchmark rate by 25 basis points or 50 basis points after the FOMC wraps up its two-day policy meeting on Wednesday. Shah stated that the decision is complicated by conflicting signals of solid economic activity but a weakening labor market.
- Forecast: Shah predicts the Fed will cut policy rates three times this year by 25 basis points at each meeting in September, November, and December.
- Possibility: However, a 50 basis-point move at the September meeting cannot be ruled out.
Bond Market Reaction
Rates in the bond market were declining on Monday. The yield on the 10-year Treasury note fell to about 3.62%, while the 2-year Treasury rate dropped to 3.54%, according to FactSet data.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.