Opportunities for investors as yields drop below 5%

The Federal Reserve announced its decision to hold interest rates at their current levels on Wednesday. Fed Chair Jerome Powell reiterated the central bank’s need to observe further progress in taming inflation before initiating a rate-cutting cycle. Joining the Morning Brief to provide insights into the rate cut outlook is UBS Global Management Head of Taxable Fixed Income Strategy Leslie Falconio.
Falconio highlights that the market had adopted a hawkish stance leading up to the Fed meeting, effectively pricing out numerous rate cuts — with markets now factoring in just one rate cut in 2024 and “a very shallow cutting path” in 2025 and 2026. She acknowledges the market’s speculation about a potential rate hike, emphasizing that “the important part” was Fed Chair Powell’s clarification on the path forward for rate cuts.

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