With the Federal Reserve having enacted a rate-cutting cycle in each of the past two years—and the market pricing in the likelihood of additional cuts later in 2026, according to CME Group’s FedWatch Tool—income investors are likely to continue turning to the equities market in order to produce a sizable yield.
The Fed’s benchmark—the effective federal funds rate—is currently 3.64%, marking its lowest point since fall 2022. And if President Trump’s next Fed chair nominee, Kevin Warsh, turns out to be dovish on interest rates, it could spell more trouble ahead for fixed income.
