What's Driving Markets...
1. The Federal Reserve (Fed) finally delivered on its long-anticipated rate cut, the first since early 2020, joining a host of other global central banks in easing policy. The 50 basis-point (bps)^* cut and remarks from Fed Chair Jerome Powell during the ensuing press conference were interpreted as moderately dovish. Though yields were little changed following the meeting, it appears the Fed is shifting its focus from inflation to the labor side of the dual mandate. While Powell described the risks to achieving its goals as balanced, he included the following comment in his prepared remarks at the press conference:

“As inflation has declined and the labor market has cooled, the upside risks to inflation have diminished and the downside risks to employment have increased.”

^* A basis point is a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Important Risks: Investing involves risk, including the possible loss of principal. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. • Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. • Mortgage-related and asset-backed securities’ risks include credit, interest-rate, prepayment, and extension risk. The value of the underlying real estate of real estate related securities may go down due to various factors, including but not limited to strength of the economy, amount of new construction, laws and regulations, costs of real estate, availability of mortgages, and changes in interest rates. • Loans can be difficult to value and less liquid than other types of debt instruments; they are also subject to nonpayment, collateral, bankruptcy, default, extension, prepayment and insolvency risks. • Foreign investments may be more volatile and less liquid than US investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. These risks may be greater, and include additional risks, for investments in emerging markets. 

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