The Federal Reserve decided on June 17 to keep the federal funds rate parked at 3.5%-3.75%. Mark Cabana, co-head of global rates research at BofA Securities, joined Bloomberg’s “Real Yield” to unpack what the Fed’s latest stance means for fixed income and the broader economy.
The headline takeaway: Citigroup has revised its forecast for the first rate cut to October 2026, a month later than its previous call of September. The shift came directly in response to the Fed’s updated projections released alongside its decision to hold rates steady.
Stronger jobs, stickier rates
May 2026 nonfarm payrolls came in at 172,000, beating expectations and keeping the unemployment rate anchored at 4.3%. The federal funds rate has been holding steady in the 3.5%-3.75% range since December 2025, after the central bank delivered three rate cuts in the final months of last year.
Cabana and Jamie Patton, co-head of global rates at TCW, discussed the implications during the Bloomberg segment with host Scarlet Fu. The conversation centered on why the Fed’s revised forecasts suggest policymakers are in no rush to resume cutting, particularly with the labor market showing this level of resilience.
