“Bond yields rose in October, but this time in a much more mixed fashion. The two year Treasury yield increased by 20 basis points, while the thirty year bond rose by 39. The broad market as represented by the Barclays U.S. Intermediate Aggregate Bond Index had a total return of -0.80%, while the Barclays Municipal Bond Index returned -0.83%.
The bond market continues to be driven by expectations of Fed policy changes. On November 2, the FOMC announced its fourth consecutive rate hike of 75 basis points, bringing the Federal funds overnight rate to a range of 3.75% to 4%. Despite some evidence of either moderating inflation (from improved supply chain dynamics) or outright deflation (home price declines), not enough progress has been made, so we expect just a moderate downshift in the Fed’s pace: we expect a 50 basis point rate hike on December 14 and more to come in 2023.”
TC129793(1122)1