Minute Market Update | April Fed Meeting — 4.24.26
Fed Futures leading up to the April 29th meeting signal greater than a 99% chance of no rate adjustment despite the extra noise surrounding Jerome Powell’s last Fed meeting as Chairman and economic impacts from the war in Iran.
The Fed appears poised to keep the Fed Funds target, currently at 3.50-3.75%, unchanged on April 29th for the third consecutive meeting, citing the conflicting data points of their dual mandate. The U.S. labor backdrop has proven to be resilient and economic growth remains strong. Inflation persists well above the Fed’s 2% target and, while the war in Iran presents further inflationary risks, the Fed is unlikely to change rates due to a potentially short-term shock.
We expect the themes discussed to remain consistent with last month’s meeting: the ongoing monitoring of CPI and PPI, specifically regarding supply and demand energy concerns, and the labor market’s employment strength in the face of AI spend. Private credit concerns have become secondary in the face of rising energy prices, and although fund redemptions have been in the headlines, we view the lack of material changes to credit spreads as a sign of strength for the overall bond market.
The 2-year yield has remained above the Fed Funds target since early March, when it became clear that the U.S. involvement in Iran was not going to be days or weeks. That dynamic represents a clear preference for stable or higher rates from the bond market. We anticipate the Fed’s commentary to reflect a willingness to hike rates sometime this year should the war in Iran persist and inflation continue its current upward trajectory. As of April 22nd Fed Futures, June’s meeting, the first with a new Chairman, has a mere 4.2% chance of a rate cut. Currently, there is approximately a 30% chance of a rate change at some point in 2026.
Fed Funds Rate Futures
We continue to monitor the health of the global economy and state of geopolitical affairs, as well as the Fed’s policy. Our strategies, as they always have, will interpret changing data and adjust allocations accordingly. Historically, markets have proven to be positively sloped regardless of what data point or geopolitical situation the Federal Reserve is evaluating to decide on monetary policy.
As always, we appreciate the opportunity to serve as stewards of your clients’ money and look forward to continuing our service. Please feel free to reach out to investments@kingsview.com or any member of the Investment Committee should you have any questions.
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