Portfolio Manager Commentaries

If Fed watchers could assign a theme to this year’s first trimester it would likely be “disappointment.” Find out why Allspring anticipates the next rate cuts won't be until late this year.

The Feds meeting on March 20th was quite uneventful as there were no rate changes this month. If 2023's impressive disflation resumes in the coming moths, we believe the Fed will probably have the confidence it needs to begin lowering rates this summer.

At its first meeting of 2024, the Fed kept rates steady and signaled that cuts are next. But the question remains "when?"

After a record-breaking 2022, the Fed continued its aggressive tightening in 2023. However, the second half of the year saw a downward trend in inflation, which led to three consecutive pauses by year-end.

The FOMC has left rates unchanged since July. This extended pause, combined with favorable-trending inflation data, has caused market participants to believe that the Federal Reserve’s tightening cycle is finished.

After rates went unchanged at the September meeting, the Fed’s hawkish tone emphasized its intent to maintain rates at higher levels for a longer period of time.

After a pause in June and a 25-basis-point rate hike at the July meeting, Fed Chair Powell remarked that the Federal Open Market Committee would proceed carefully when deciding on a hike or a hold in the future.

While the Federal Reserve decided to pause rate hikes in June, economic data indicates that there is still a way to go before it can declare victory over inflation.

Markets are heaving a sigh of relief from having safely navigated May's debt ceiling drama.