The Fed failed

A postmortem of the Fed's failed attempt to normalize

A major factor pushing the Fed to lower rates has been the message from financial markets, which moved rates lower before the Fed’s March halt and even more aggressively before the June meeting.

The yield on the 2-Year Treasury, an important indicator of expectations of Fed policy, fell from a peak of 2.89 percent in November 2018 to 1.86 percent before the FOMC June meeting.

Methodology for calculating future expectations in current bond yieldssuggests markets now expect future short-term rates to fall below 1.50 percent. The financial markets have been more accurate than the Fed at projecting future interest rate movements.