The Market Expects the Fed to Pause

Fed Chairman Jay Powell said that these recent rate cuts are merely “mid-cycle” adjustments. It looks like the market believes him. The Fed may leave interest rates alone for a few months.

According the latest futures prices, the odds of a rate cut next month are just 8%. In fact, the futures market doesn’t see the Fed changing interest rates until July 2020. That’s at the earliest.

Also, the two-year yield has stabilized (kind of) around 1.5% to 1.7%. The two-year can sometimes be a good advanced “tell” of what the Fed will do.

The yield curve is now almost perfectly flat until three years out. After that, it slopes upward.

Posted by on November 6th, 2019 at 2:40 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.