Weekly Market Commentary 6/3/2019

The Federal Reserve’s dilemma keeps growing, even as its past actions are coming under increasing criticism. With the unemployment rate at a 50-year low, wage growth accelerating, household confidence elevated and the economy coming off an above-trend growth rate in the first quarter, the case for a rate cut would seem to be weak at best. Yet the financial markets are betting that the Fed will do just that before the end of the year, pricing in a more than 90 percent chance that the federal fund rate will be lower than the current 2.40 percent average by December. Adding heft to market’s bet, the 10-year Treasury yield has fallen to the lowest level since September 2017, having plunged more than a full percentage point since last November, and is currently below the rate on three month Treasury bill, an inversion that is a time-honored signal of economic weakness.

  • DATE: June 3, 2019
  • TYPE: PDF

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