Federal Reserve (Fed) Chair Jerome Powell headlined last week’s Jackson Hole Economic Symposium, titled “Reassessing the Effectiveness and Transmission of Monetary Policy." In his speech, he could not have been more clear: “The time has come for policy to adjust." While the market is expecting a rate cut at the next Fed meeting in September; next month's employment report will likely reveal whether we will get a 0.25% or 0.50% cut.

Amid elevated debt and deficits, we expect more market volatility ahead, as financial markets become more sensitive to fiscal and political adjustments. With the Fed set to cut interest rates this year and into 2025, we are likely going to notice shorter-maturity Treasury yields fall more than longer-maturity yields. The Treasury yield curve is still inverted, so until the curve “rights itself” longer-maturity yields are likely stuck at or around current levels. This limits the potential for price appreciation, but income opportunities are more enduring.