Fed Signals Slower Cuts as Treasury Yields Hold Near 4%
The Federal Reserve used its February minutes to remind investors that rate cuts are not locked in for March, even though inflation is trending lower. Chair Jerome Powell said the committee wants “greater confidence” that price gains will keep easing before moving.
Here are the market takeaways:
- Two cuts now baseline: Futures pricing slipped to ~45bps of easing in 2026—down from nearly 150bps late last year.
- 10-year yield steady: Benchmark Treasuries are hovering around 4.18%, reflecting stickier growth and shrinking term premium.
- Equities rotate: Tech megacaps cooled while financials and industrials picked up, a classic late-cycle move.
Why it matters: funds that front-ran aggressive easing now need to re-evaluate duration and risk exposure. A slow-cut regime favors quality balance sheets, positive cash flow, and companies that can sustain capex without cheap debt.
Watch list: upcoming PCE print (March 1) and ISM services. Any upside surprise keeps the Fed patient and supports the dollar.
