The Next Big Fed Move in May

April 22, 2024

By Robert Wiedemer

Earlier I had reported that the Fed was planning to start reducing its sales of bonds after their March meeting based on information from the Wall Street Journal.  Reducing sales of bonds is absolutely essential to keeping the 10 year interest rate from going higher quickly.  Well, the Wall Street Journal’s information wasn’t correct.  The Fed kept selling bonds right through April and the 10 year interest rate jumped a half percent to 4.6%, which the stock market didn’t like at all.

The good news is that the Economist reports that the Fed will likely announce at its May 1 meeting that it will reduce bond sales in June.  In fact, it will reduce them by 50%.  Hopefully that will be confirmed at their May 1 meeting.  But, for now, it’s a good reason to expect the reduction in bond sales is coming soon, even if it didn’t happen in April.