The Slow Crawl Towards Monetary Policy Easing

Published: Jul 12, 2024

Investor knowledge 10 minutes

Since the U.S Federal Reserve (Fed) delivered its last hike in July 2023, further disinflation progress had enabled it to pare back its hiking bias by the beginning of this year.
No one knows what will happen with any certainty, however, it is important to think through the most plausible macro scenarios and understand how they can impact Fixed Income investments.
Our base case scenario is further disinflation and a moderation of growth in 2024, and the expectation that the Fed will deliver its first interest rate cut later in the second half of 2024 and 2 cuts by the end of this year.
For investors, despite the appeal of the higher yields being offered by short-term bonds, longer-term bond yields remain far more compelling today than they have been in years.