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Market Update | April 25, 2024

Following the Federal Reserve’s communications these days is like watching an endless point in a tennis match. The back-and-forth is causing anticipation, confusion, and more anticipation. The Fed’s interest rate policy, although only directly affecting short-term rates, is a driver in the valuation of financial markets broadly.

Back to watching a point in a tennis match: Atlanta Fed President Raphael Bostic suggested one interest rate cut. San Francisco Fed President Mary Daly noted no guarantees, and Cleveland’s President Loretta Mester said rate cuts may come later this year. Minneapolis President Neel Kashkari said that no cuts may be on the table, followed by Fed Governor Michelle Bowman, who said it’s possible rates may have to move higher to control inflation.

Confused? You’re not alone. So are the financial markets. Market speculators now anticipate only one, maybe two, cuts this year. But as the percentages in the illustration show, there’s not much conviction in any outlook.

What do we believe is the takeaway? Predicting interest rates is no easier than predicting the near-term moves of any market. Rather than letting the Fed’s communications, which we can’t control, influence your investment strategy, remain focused on your personal investing objectives, time horizon, and risk tolerance. Let us know if we can be helpful in this way.

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