The Federal Reserve's measured rate cuts mark a shift toward policy easing – but one tempered by persistent inflation and uncertainty about the long-term outlook. While headline inflation has eased, it remains above target, and investors are watching closely to see how far and fast the Fed can move without reigniting price pressures.
According to PIMCO's Richard Clarida, this careful approach underscores a renewed opportunity for fixed income. Yields across high-quality bonds remain compelling, and history shows that bond markets often perform well during rate-cutting cycles. With inflation expectations well anchored, today's higher starting yields offer a strong cushion for returns.
For investors, this environment favours diversification and disciplined duration management to balance risk and return.
Read the full article on Investment Week's Fixed Income Portal.
