Bond Market Update

FOMC Chooses Larger Cut

• U.S. Treasuries have risen off their lows with shorter tenors leading the move after the FOMC announced a 50-bps cut to the fed funds rate range, which now sits between 4.75% and 5.00%. The vote was not unanimous as Fed Governor Bowman voted in favor of a 25-cut. The central bank also released its Summary of Economic Projections, which showed the median estimate for the 2024 fed funds rate is now at 4.40%, down from 5.10% in June, while the estimate for 2025 has fallen to 3.4% from 4.1% in June. Equities have raced to highs in reaction to the release with the S&P 500 (+0.4%) trailing the Nasdaq (+0.6%). Fed Chairman Powell will speak about today's decision at 14:30 ET.
• Yield Check:
  • 2-yr: UNCH at 3.59%
  • 3-yr: +1 bp to 3.46%
  • 5-yr: +2 bps to 3.45%
  • 10-yr: +3 bps to 3.67%
  • 30-yr: +4 bps to 3.99%