Fixed Income Market Update

October 7, 2022

Paul Volcker was Chairman of the Federal Reserve Board of Governors from 1979 through 1987. He and his board are widely credited with curbing the high rate of inflation in the late 70’s and early 80’s. He accomplished this by raising the overnight fed funds rate to a level of 20% in March of 1980 and again in May of 1981. It wasn’t until February 1982 the Fed relented and allowed the overnight rate to ease. 

As different Fed Governors give talks, they point to the lessons of the 70’s about not raising enough or easing too soon. This is a significant change in the earlier “Soft Landing” message. The Chairman has spoken to the risk of recession and the need to go through this period to set up the next decade of growth and prosperity. 

So as we look at the last 2½ months of 2022 and into 2023, where does this leave us? A revisit of double digit Fed Funds Rates, or 12 more months of higher rates? We don’t think so, Inflationary forces seem to be stabilizing and cracks are starting to show up in the economy and the markets. This cooling and cracking could allow the Fed finish raising rates with a few increases, pause for a period and then begin to ease.

Looking at the CME Fed Watch Tool, the markets expect the Fed to increase the Overnight rate 75 basis points at the November meeting, another 50 basis points in December, and perhaps another 25 early next year. That should get us to a Fed Funds range of 4.5- 4.75%. That is a long way off 20%, but we think it’s enough to slow economic growth. Inflation, while still running at a high rate, is not surprising to the upside and the most concerning part, shelter, has seen significant pull backs recently. But these shelter numbers will take time to work into the index (about 6 months) and that means higher overnight rates for longer.

Cracks, in the economy like the FedEx report of slower traffic or cracks in the market like the UK Gilt Crisis, will continue to occur as we work through this. Know what you own, limit your risk but remain opportunistic. To quote Paul Romer, Stanford Economist, “A crisis is a terrible thing to waste”. Looking at the tables below, this is a good time for savers to lock in yields not seen in years on high quality US Treasuries, corporates, and municipals. Will it be the highest yields we see? Hard to know, but you will know you are earning an attractive rate on high quality bonds, no matter what happens in the markets.

-Peter Baden, CFA
Chief Investment Officer

Click on the above links for more information on important investment and economic concepts.

Source of Interest Rates: US Treasury Yields via Bloomberg LP see footnote at the bottom of this e-mail for which indexes are used.
Click on the above links for more information on important investment and economic concepts.

CME Fed Watch Tool


Contact Genoa Asset Management

William (Kip) Weese
SVP, Intermediary Sales
Northeast & South West
(508) 423-2269
Email Kip

Art Blackman
VP, Intermediary Sales
(816) 688-8482
Email Art

Rick Bell
VP, Intermediary Sales
North Central & North West
(513) 762-3694
Email Rick


Indexes used for AAA Municipal Yields

2 Year: BVAL Municipal AAA Yield Curve (Callable) 2 Year (Symbol: CAAA02YR BVLI)

5 Year: BVAL Municipal AAA Yield Curve (Callable) 5 Year (Symbol: CAAA04YR BVLI)

10 Year: BVAL Municipal AAA Yield Curve (Callable) 10 Year (Symbol: CAAA10YR BVLI) 

30 Year: BVAL Municipal AAA Yield Curve (Callable) 30 Year (Symbol: CAAA30YR BVLI)

Indexes used for US Treasury Yields

2 Year: US Generic Govt 2 Year Yield (Symbol: USGG2YR)

5 Year: US Generic Govt 5 Year Yield (Symbol: USGG5YR)

10 Year: US Generic Govt 10 Year Yield (Symbol: USGG10YR)

30 Year: US Generic Govt 30 Year Yield (Symbol: USGG30YR)

F/m Investments, LLC, doing business as Genoa Asset Management (Genoa), is an investment advisor registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. For more information please visit: and search our firm name. The opinions expressed herein are those of Genoa and may not come to pass. The material is current as of the date of this presentation and is subject to change at any time, based on market and other conditions. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. The information presented does not involve the rendering of personalized financial, legal or tax advice, but is limited to the dissemination of general information for educational purposes. Please consult financial, legal or tax professionals for specific information regarding your individual situation. This information does not constitute a solicitation or an offer to buy or sell any securities. Although taken from reliable sources, Genoa cannot guarantee the accuracy of the information received from third parties. Charts, diagrams, and graphs, by themselves, cannot be used to make investment decisions. Investing involves risk of loss, including loss of principal. Past performance is no guarantee of future results. An index is a portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.