The Fed cut rates 0.25% as expected last week, although the commentary from Jerome was more hawkish than some hoped but the futures market is still looking for an additional four or five rate cuts into next Christmas. The short-dated US 2-year bond yields hardly moved during the week, remaining very comfortable in the 3.5% area. At this stage, while we are net bearish, another test up towards 4% cannot be ruled out.
- We believe the US 2’s can test 3% in 2026, which should be supportive of rate-sensitive stocks.
MM is cautiously bullish on US bonds (yields lower), medium/long term
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