One of the most important shifts over the last year has been the sharp turnaround by the Fed in its monetary policy stance. Faced with a market revolt, tame inflation, growing trade tensions and a slowing global macro environment, the Fed pivoted in a dovish direction. From a year ago, the market has shaved 1.5% off the one-year forward Fed Funds rate expectations.
Source: FRED
This repricing of short-term rates has had large and multiple impacts on financial markets. One potentially overlooked impact that is nevertheless important for CEF investors is the impact of leverage