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FOMC Preview: Fed Skip, Pause, or Hike?

The Federal Reserve (Fed) meets this week where it is largely expected to not raise short term interest rates for the first time in 15 months. However, Fed messaging has been all over the place in recent weeks. While some Fed officials continue to advocate for additional rate hikes, others want to be more patient. So, according to current market pricing anyway, the Fed is expected to skip the June meeting before hiking again in July which could mark the starting point for an extended pause. It can be very confusing to markets at times. And throw in the glut of Treasury issuance expected to come to the market and the Fed is likely going to continue to stay in the news for the foreseeable future. The good news? We agree with markets that the end of the rate hiking campaign is near, which has historically been a good thing for core bond investors.

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