Financial Market Research Brief

Fed cuts overnight rate again in December. As widely expected, the Federal Open Market Committee conducted this year’s third 25-basis-point cut to the federal funds rate, setting a new lower-bound target of 3.5 percent. The total reduction since mid-September has helped bring down other benchmark short-term rates such as SOFR, which has fallen about 50 basis points over the past four months to 3.93 percent. During the same period, the yield on the 10-year Treasury has fluctuated between 4.0 percent and 4.2 percent, down from the mid-4 percent range earlier this year. Through Fed actions and other market forces, borrowing costs have eased modestly this year.