In 2021, the stock/bond correlation flipped to positive after remaining negative for a majority of the preceding 20 years.

While it seems fitting that rates are beginning to fall within days of the Autumnal Equinox, I doubt Fed officials were aiming for the play on words. So, what were they paying attention to as they made this most recent decision?

Since mid-2022, when the Federal Reserve was in the midst of its aggressive hiking cycle, investors piled over $1.6 trillion into money market funds, which include Treasury bills.

After more than six months of indicating that it lacked conviction regarding the path of inflation, the Federal Reserve (Fed) seems to have gotten a conviction boost so large that it pushed it to lower the federal funds rate by 50 basis points at the September Federal Open Market Committee (FOMC) meeting.

While the stock market rallied after the long-awaited Federal Reserve rate cut last week, there’s a sense of unease accompanying the gains.

Federal Reserve Bank of Atlanta President Raphael Bostic said starting the central bank’s cutting cycle with a large move will help bring interest rates closer to neutral levels as the risks between inflation and employment become more balanced.

The Federal Reserve’s interest rate cut last week has led many to wonder what it means for mortgage rates. The housing website Redfin noted that some would-be homebuyers aren’t aware that we’ve already seen a steep decline, while others are waiting for mortgage rates to fall more.

I’m moving up a letter I was planning to share with you on my birthday weekend in two weeks. The story about sandpiles and the financial system may be the most popular letter I’ve written in the last 25 years. It is one we should all re-read every few years to remind us how change happens slowly, then suddenly.

More than two years after first taking steps to contain swelling inflation, the Federal Reserve (the Fed) has taken a step back, suggesting monetary policy decision-makers have confidence that inflation will continue to move closer to the Fed’s target, allowing them to turn some attention to economic growth.

We expect the Fed to cut rates by 25 basis points at each of its remaining meetings in 2024 and to sustain that pace into 2025. This trajectory would get the Fed down to our estimate of the normal or equilibrium rate of interest of 3%-3.25% this time next year.

As GMO celebrates its 30th anniversary managing emerging debt this year, we offer our comprehensive guide to emerging debt markets. Given the tumultuous recent events – a global pandemic, defaults, repricing of interest rates, relentless strength in the U.S. dollar – we’ll focus on the Why as a starting point. Then we’ll dive into the proliferating How, covering strategies and vehicles.

From "how" to "why now," here are four things investors should understand about bond investing.

The Northern Trust Economics team reacts to the Fed's decision and shares its outlook for U.S. growth, employment and inflation.

Former Treasury Secretary Lawrence Summers said inflation will probably prevent the Federal Reserve from lowering interest rates as much as expected in coming years.

Jay Powell: Federal Reserve Chair, soft-landing pilot … car dealer extraordinaire?

Now that the Fed has begun the rate-cut cycle, investors can use option income ETFs to provide long-term income and risk protection.

With the decision on Wednesday to lower interest rates (for the first time since March of 2020) by a substantial 50 basis points (bps), rather than the 25 bps cut we typically see at the beginning of an easing cycle, the Fed is showing confidence that the disinflation trend will continue.

Americans might be forgiven for basking in self-satisfaction when it comes to the economy. The country’s most prominent CEO, Jamie Dimon, has called the country’s boom “unbelievable,” and its most stimulating magazine, The Atlantic, has dubbed it a “superstar.”

We believe the Fed is on a path to continue to cut rates over the next several meetings to realign monetary policy with a now more “normal” U.S. economy.

The half-percentage point reduction at the September 17-18 FOMC meeting represents the largest non-COVID era cut by the Fed since 2008.

Conference season brings about its own set of volatility catalysts. Portfolio managers and traders must keep their ears out for clues on the state of the broad economy, specific industries, and individual companies.

The Fed began the process of rate cuts today, and they came out not with a whimper, but with a bang, cutting rates by 0.5% (50 basis points). Following the June meeting, Fed members forecast it would be appropriate to cut rates once – by 25 basis points (bps) – in 2024. Three months on, they have already surpassed those expectations, and forecast further cuts before the year is through.

GMO has posted a new 7-Year Asset Class Forecast.

The Fed enacted a 0.50% interest rate cut, the first in the Fed’s historic fight against inflation that’s lasted over two years.

Policymakers indicated that more interest rate cuts were likely in coming months.

In the long-running popular series about what’s wrong with economics, there is a new entry: Our profession is too insular. “Economists generally agree that competition is good, and that markets with only a few dominant players are inefficient,” writes the economist David Deming in the Atlantic. “We may need to take a hard look in the mirror.”

The Federal Reserve on Wednesday began its policy easing with a bang. Much of the focus was on its decision to cut interest rates by half a percentage point from a two-decade high. But the key question for the bond market is where rates will land once all is said and done. Nobody knows for sure, and Chair Jerome Powell injected enough uncertainty to ensure a choppy ride ahead.

Jerome Powell delivered exactly what traders up and down Wall Street had long hoped for: A big interest-rate cut that would justify this year’s steep rally in stocks and bonds as the era of tight monetary policy finally began to reverse.

After much anticipation, the Fed finally delivered a rate cut at the September FOMC meeting. The amount had been the subject of a great deal of speculation of late, and the voting members decided on a half-point reduction to kick off this easing cycle, bringing the new Fed Funds trading range down to 4.75%–5%.

As the kiddos return to school, our fantasy football lineups are set, and the summer has ended, not only is the weather turning in the Northeast, but the inflation challenges are also cooling. The Federal Reserve’s (Fed) preferred inflation gauge, the PCE, was released at the end of August and came in at 2.5% month-over-month for July.

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

While the beach version of SoCal has had an epic, non-marine layer summer, it seems to have been enjoyed by few locals who instead violate the cardinal rule of adult life without children living at home and nevertheless travel to Europe in summer. We haven’t missed you.

The Federal Reserve’s looming rate cuts are fueling a rally in the riskiest corner of the US corporate bond market, but some investors are concerned the party may not last.

The Federal Reserve is widely expected to begin cutting interest rates this week as moderating inflation allows the central bank to roll back some of its previous rate increases. I expect that some investors will be tempted to chase stocks given the stubborn conventional wisdom that interest rates and stock prices move in opposite directions. They should reconsider.

The last five years have bombarded investors with a seemingly never-ending array of challenges. Yet despite all these obstacles the S&P 500 is up almost 90% as of this writing.

History suggests Presidential elections are not nearly as important to the financial markets as the media plays them up to be, and a focus on fundamentals rather than political slogans has generally been beneficial. Historical asset class and sector performance shows virtually no consistent performance pattern under Democratic or Republican Presidents.

The August jobs report highlighted a critical reality: the labor market is cooling off. While the headline figures seemed decent, the underlying data reveals clear warning signs that worker demand is slowing.

The markets closed quite strong last week and were approaching all-time highs again for the S&P 500. The most recent Presidential debate shifted the odds markets, as Harris became a 55-45 favorite on the betting site PredictIt and a very slight favorite on Polymarket. It is positive for the risk markets which did not pull back with Harris gaining strength.

The yield curve measures the difference between short-term, intermediate-term, and long-term Treasury yields.

The Federal Reserve (Fed), and markets, overreacted to the slightly higher inflation seen during the first quarter of the year. After that scare, the Fed went from expecting three cuts in the federal funds rate in 2024 to just one cut during its June dot plot release.

The Federal Reserve is widely expected to begin cutting interest rates at its September meeting. Market performance may depend on whether the pace of cuts is fast or slow.

The August consumer price index report showed that U.S. inflation slowed to 2.5%

How rapidly should the Fed cut rates?

You don’t have to read or listen for long these days before you hear a politician, pundit, or politically-inclined person say: “Government spending causes inflation.”

The longest continuous yield curve inversion has finally come to an end. Or has it? The answer depends on how you measure it.

Despite these positive developments, many people continue to feel uneasy about the economy.

I have looked at market data on inflation expectations, Fed Funds futures, and other factors that influence interest rates. Today, I add an unorthodox factor to the list: cash cows.

The time has come! After the most aggressive tightening cycle in modern history, the Fed is ready to turn the page and begin dialing back its policy restraint after the second longest ‘on hold’ period (14 months) in history. Barring any surprises, the Fed should lower interest rates at its meeting next week—the first rate cut in over four years—in the hopes of preserving a soft landing for the economy.

BlackRock Inc. strategists turned underweight short-dated US Treasuries from overweight, saying the extent of Federal Reserve interest-rate cuts the market is betting on is unlikely to pan out.

The US Federal Reserve faces a crucial decision at its policy-making meeting this week: Ease off slightly on monetary restraint with a 25-basis-point interest-rate cut, or go for a rare 50-basis-point cut to fend off a recession.