Interest Rates Plunge After FOMC Cuts Interest Rate

Both the municipal and Treasury markets rallied one day after the Fed cut interest rates by 25 basis points and after President Trump’s declared more tariffs on China — all of which caused the 10-year Treasury to dip below 1.90%.
Financial markets continue to price in greater odds of another 25 basis point Fed rate cut later this year. According to the CME FedWatch tool, odds a 25 BP rate cut when the FOMC meets on Sept 17-18 increased 70.4% from 51.9% following Trump’s tweets of additional tariffs.
“The 10-year hit its lowest level since Nov. 2016 and munis followed right along,” said one New York trader. “Yields keep going lower and we are looking at one of the big-gest volume weeks we have had in a while next week – it should be very interesting, to say the least.”