For decades we’ve been told “Don’t Fight the Fed”. Of late, and since their easing cycle began it’s paid to. Make no mistake about it this is not just curve normalization and the long end.

Short end rates are moving too, and we are quickly pricing out rate cuts for 2025. Options markets pricing rate hikes. We have favored the adjustment in the forward SOFR curve and shared those views along the way.

There are some comparing this to 2016. It’s far more challenging with a pandemic in between, inflation cycle emerging since 2021, and debt levels $15 trillion higher. We’ve dug a hole globally on the fiscal and monetary side.

The easy part in raising rates to thwart the inflation surge is over. The higher term premium in the United States a reflection around uncertainty in policy and pathway moving forward but well within the norms historically.

Gregory (Greg) Faranello, CFA Head of US Rates at AmeriVet Securities, Inc. reviews the rates outlook in this week’s Monday Minutes.