In this article, Scott Grannis shows that the bond market (with low yields, especially at the short-end) is indicating that the Federal Reserve Bank should consider cutting rates to 2.0% from the current 2.5% (two easings).
We are in the midst of a mini-replay of the drama surrounding Fed policy that played out late last year and early this year. Back then the market was telling the Fed that it was mistaken in planning two more rate hikes this year, but it took the Fed a bit too long to figure that out, and that in turn led to a severe equity market selloff. But in the end they did figure it out, and they apologized to boot. Now the bond market is telling the Fed that at least two rate cuts are needed. They are needed to offset the increased uncertainties surrounding Trump’s trade/tariff wars, which have now expanded to include Mexico, and the general malaise which has kept economy’s growth potential from being fully realized.
You can read the entire article by clicking: … HERE
Bob Weir has over 50 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He joined eResearch in 2004 and was its President, CEO, and Managing Director, Research Services until December 2018. Prior to joining eResearch, Bob was at Dominion Bond Rating Service (DBRS).
