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Monetary Policy: Recalibrating Expectations in Q2
John R. Sides, CFA
Second Quarter, 2024
For fixed income investors, 2024 has largely been defined by a recalibration of monetary policy expectations. This was on full display as another previously expected Fed cut was priced out of the futures market during the quarter. On March 31st, almost three Fed Funds rate cuts were expected by year-end. By the end of June…
Shifting Gears: Fed's First Rate Cut and Q3 Dynamics
Third Quarter, 2024
John R. Sides, CFA
As inflation data moderated and growth remained intact, the third quarter witnessed the long-anticipated initial rate cut by the Federal Reserve. Having all but declared victory on inflation, the message from Powell was that it is time to shift focus towards the other half of the dual mandate – maximum employment. The Fed pointed to weakening payrolls data…
Market Outlook: Q1 Policy Shifts and Quality Opportunities
John R. Sides, CFA
First Quarter, 2025
After a tremendous rally in risk assets throughout most of 2024, the first quarter of 2025 witnessed a marked reversal. While the primary drivers of last year’s price action were dovish Fed policy and a benign inflation outlook, attention has now shifted to the economic policies of the current administration and their potential impact on growth. Various policy proposals—namely tariffs—led to significant volatility across equities…
A Hawkish Shift: Markets React to Inflation and Policy Signals in Q4
Fourth Quarter, 2024
John R. Sides, CFA
The final quarter of 2024 was marked by a distinctively hawkish turn in expected monetary policy. While the Fed eased twice during the quarter—25bps at their November meeting and another 25bps at the December meeting—the narrative changed significantly. The primary driver? A high likelihood of inflationary policies from the incoming administration, which would complicate the Fed’s ability to implement further rate…
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