Treasury Market Anticipates 25 Basis Point Fed Rate Cuts in November and December

According to Jinishi: The U.S. Treasury market is pricing in two 25 basis point rate cuts by the Federal Reserve in both November and December, aligning with the median projection from the Fed’s dot plot, according to Felipe Villarroel, portfolio management partner at TwentyFour Asset Management. In a recent note, Villarroel highlighted that investor expectations have become more in line with those of the Fed over the past few weeks.Villarroel emphasized that the Fed’s base case is a "soft landing" for the U.S. economy, where inflation is reduced without significantly harming economic growth or the labor market. He noted that the Fed expects growth to hover near the potential rate of 2%, which would likely require a neutral interest rate of approximately 3% to achieve this balance.