Fed's Smaller Rate Cut May Trigger U.S. Treasury Sell-Off

In Brief:

Glen Capelo of Mischler Financial Group suggests a 25 basis point rate cut by the Federal Reserve could lead to a sell-off in U.S. Treasuries, influenced by Powell's press conference.

Michael Rosen of Angeles Investments believes the bond market is too aggressive in pricing rate cuts, predicting short-term yields will decline less than expected and long-term yields might rise.

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Fed's Smaller Rate Cut May Trigger U.S. Treasury Sell-Off

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As the Federal Reserve considers a 25 basis point rate cut, experts warn of potential sell-offs in U.S. Treasuries. Glen Capelo, managing director of fixed income at Mischler Financial Group, highlights the influence of Powell's press conference on market reactions.

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Market Expectations and Bond Yield Predictions

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Michael Rosen, executive partner and chief investment officer of Angeles Investments, argues that the bond market is pricing the Fed's rate cuts too aggressively. The market anticipates a 250 basis point cut next year, a scenario Rosen believes feasible only in the event of an economic recession. He predicts that short-term U.S. Treasury yields will decline less than market expectations, while long-term yields may rise.

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The Federal Reserve's decision and subsequent market reactions remain critical as investors navigate the implications of potential rate adjustments and their impact on the bond market.

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