Stocks surge after Fed indicates three rate cuts still coming this year





Treasury Yields Teeter as Fed Sticks to Forecast

2:37 p.m. ET, March 20, 2024

Treasury yields teeter as Fed sticks to its forecast of three cuts this year

Treasury yields wavered Wednesday afternoon after the Federal Reserve announcement that it is holding rates steady and reiterated that it expects to cut interest rates three times in 2024.

The 2-year yield fell to 4.65%, while the yield on the 10-year note fell to 4.28% before edging up.

“The immediate market reaction is the relief we were expecting,” said Bryce Doty, senior portfolio manager at Sit Investment Associates. “Investors were worrying the Fed was going to pull back from rate cuts this year, so keeping three rate cuts on the table naturally pushes stocks higher and bonds yields lower.”

Traders see a roughly 74% expectation that the Fed will cut rates in June, up from about 59% a day earlier, according to the CME FedWatch Tool.

“Powell has perhaps shown his cards: He needs a good reason not to cut rates, rather than a reason to cut rates,” said Seema Shah, chief global strategist at Principal Asset Management. “However, there will be one question creating feelings of discomfort: how serious is the Fed about its 2% target?”



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