The Fed made it official yesterday- they think they have pulled off a “Soft Landing” and signaled three possible rate cuts next year. This sparked a massive stock market rally and caused a precipitous drop in yield in the Treasury market.
By the end of the day yesterday, these hypothetical and potential rate cuts appear to have been fully priced into the markets.
Lower yields in the Treasury market means higher prices for bonds and other fixed income assets like DCF Income Payments. As I noted last week, our prices will be going up as yields will be falling in the next few days.
The time to get in is now. If you like yields on our inventory, get them while you can.
Here are some key highlights from the WSJ:
Powell’s remarks, along with new projections showing Fed officials anticipated three rate cuts next year, marked a notable U-turn. For more than a year, he had warned that they would raise rates as much as needed to lower inflation even if that triggered a recession.
The comment about rate cuts was surprising because just two weeks ago during an appearance at Spelman College in Atlanta, Powell said it was too soon to speculate about when lower rates might be appropriate.
“Powell played Santa Claus early,” said Diane Swonk, chief economist at KPMG. “It was a 180-degree shift, right there.”
