Treasury yields (^TYX, ^TNX, ^FVX) swing higher in response to the Federal Reserve’s decision to cut interest rates by 50 basis points yesterday. PGIM Fixed Income Co-Chief Investment Officer Greg Peters shares his perspective on how the bond market could move off of future rate cuts. “You’re seeing that in the reaction today where the bond market’s taking a breather because what’s built into the current pricing is just a continuation of a lot of cuts. Over 150 [basis points] or so,” Peters tells Yahoo Finance. “And to me and to others, I think that actually has to be more of a tipping into a recession type of an environment, not a soft landing. So I think it’s just a little too much too soon, honestly.” Peters believes the central bank’s rate forecasts to be in line with his own projections and should show to be “rationalized over the next several months or quarters.” On the fixed income side of things, Peters outlines why Treasuries and the fixed income sector “provide a tremendous offset to your portfolio” in case of a recession or economic slowdown.
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