The Federal Open market Committee meeting dominated the markets this week, with the Fed deciding to leave rates unchanged at 5.25%-5.5%, as widely expected.
Dot Plot Indicates 1 More Rate Hike, Fewer Cuts in 2024: The median preference for the projected fed funds rate at the end of 2023 held steady after Wednesday's Fed decision, aligning with the previous June forecast at 5.6%. This suggests the Fed is leaning toward one additional rate increase in either one of the two remaining meetings this year. FOMC members have scaled back their projected rate cuts for next year, now indicating a total of 50 basis points of cuts for 2024, a more hawkish shift from the previous June projection of a full percentage point reduction.
Powell Delivers Balanced Remarks: During his press conference, Fed Chair Jerome Powell cautiously balanced his tone. He warned the path to the 2% inflation target has a long way to go, possibly keeping interest rates elevated for longer. At the same time, Powell indicated the Fed’s readiness to proceed carefully based on forthcoming economic data without a firm commitment to additional rate hikes.
Treasury Yields Hit 17-Year Highs: Yields for two-year Treasury notes reached 5.2% on Thursday, marking their highest point since July 2006. Simultaneously, the 10-year yield surpassed 4.4%, reaching levels last seen in November 2007.
Chart of The Week: Short-Term Treasury Yields Surge To July 2006 Levels As ...
