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3.4%

The median estimate of the 7 Federal Reserve Board Governors and 12 Fed regional presidents for the federal funds rate at the end of 2025, down from the prior forecast of 4.1% in June. This implies another 150 basis points (bps) of rate cuts over the next 15 months following last Wednesday’s initial 50 bp cut. The updated forecast underscores Fed officials’ confidence in the durability of a stabilizing inflation backdrop and a renewed focus on the risks to their maximum employment mandate.

6.64%

As of last Friday, the option-adjusted additional yield contained in the speculative-grade Bloomberg Caa-rated High Yield Index compared to a similar-maturity Treasury security. This credit spread (or extra yield compensation for credit risk) in one of the riskier areas of the credit market was the lowest since early April 2022, only three weeks after the Fed kicked off the rate-hike campaign that officially ended last Wednesday. High yield bond issuance has picked up in September driven by refinancing to extend debt maturities.