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Back in September, the market priced one of the most aggressive cutting cycles I’ve ever seen, with multiple 50-basis point cuts priced in that would swiftly take us to 3% on the fed funds rate in 2025. Fast forward to today, and it’s a completely different story, with one to two cuts at best priced for 2025.

Let’s dig into what has driven the change and what to expect.

Below is a chart that compares the effective federal funds rate (EFFR) against the two-year Treasury note. 

There’re a few takeaways we can grab from comparing these two yields:

Throughout the last… Read more on Blockworks