Bonds reacted cautiously to the Fed’s initial rate reduction, anticipating that the Fed may not reduce rates as quickly as hoped. The yield on the 10-year Treasury ended September at 3.81%, not much lower than where it ended the previous month at 3.91%. Yet numerous analysts ad economists believe that growing uncertainty surrounding the economy, hurricane losses, the Middle East conflict, and the election may lead to a gradually evolving lower rate environment.
The Fed signaled that it may move slower with future rate reductions should the employment market and inflation continue to expand. Recent developments such as the effects of the port strike and aftermath of Hurricane Helene, may impose new challenges and duress for hundreds of thousands of individuals and businesses directly affected by the storm, as well as indirectly affecting millions across the country, as disrupted supply chains may cause price changes.
Sources: Treasury Dept., Federal Reserve
Print Version: Fixed Income Overview Oct 2024