Traders in the Fed futures market do not anticipate a rate cut from the Federal Reserve until July 2027, with only a slim majority forecasting any reduction at that time. This scenario is influenced by potential leadership changes at the Fed, including the likely appointment of Kevin Warsh as chair.
Goldman Sachs reports that AI is eliminating approximately 16,000 jobs monthly, significantly impacting wage growth, which has declined since the peaks of 2020 and 2021. In contrast, the U.S. job market added about 181,000 jobs over the last year, averaging just over 15,000 per month. With decreasing wages and job losses, deflationary pressures are expected to increase, prompting speculations about future rate cuts.
The Nuveen Municipal Income Fund (NZF), which has appreciated around 30% since April 2023, is highlighted for its high (7.6%) and tax-free dividends. NZF’s long duration of 14 years promises further potential as interest rates decline, positioning it favorably for future gains amid a market transitioning due to AI’s economic impact.
