Without the benefit of ‘data’ I think it is fair to assume there will NOT be a rate cut in March–I mean the next FOMC meeting is only about 80 days away–is the economy going straight to hell in the next 2 months? Really the FOMC meeting minutes from December didn’t give a hint that the Fed folks are focused on cutting rates. It seems to me that only a crisis will bring rate cuts as early as March–a banking crisis, a full collapse of commercial real estate or huge losses in the non bank lenders (i.e. BDCs). Of course there are any number of global ‘black swans’ out there that can’t be identified that could cause issues.
The CME Fed Watch tool did have the odds of a rate cut in March of 70%–looking this morning it is showing a 64% chance of a cut–dreamers.
The 10 year treasury is trading at 3.96% this morning–up 6 basis points from the close yesterday of 3.90%. I assume these firm rates are in reaction to the FOMC minutes yesterday–if we have a strong employment number tomorrow we will see the 10 year back over 4%.
So now that I have questions–legitimate I think–of how soon rate cuts may come in 2024 there is no hurry to invest every possible dollar. The 10 year treasury is likely stuck in the 3.7% to 4.1% range. We are likely to have some backing and filling on income issues as rates move up and down–gains in December were pretty massive and this digestion should be expected. With some backing and filling in income issues I will watch for preferreds or baby bonds to go on sale–no chasing–set some good til canceled buy orders at slightly lower levels.