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Fed Cuts Rates, Likely Done For Year

Treasury yields ended this week lower, driven by a busy week of economic, trade, and policy announcements.  The highlight of the week was the Federal Reserve's widely expected decision to cut the Fed funds target by another 25 bps, to a a range of 1.50%-1.75%.  The FOMC accompanied this decision with a statement telegraphing the Fed's intention to move to the sidelines, leaving rates where they are for the foreseeable future. 

The week's economic data seemed to support the pause in policy moves, as Friday's jobs report indicated continued strength in the labor market.  In addition, the first measure of third quarter GDP suprised to the upside, as consumer spending drove the economy's 1.9% growth during the quarter.  Despite the better-than-expected reading, there is no question that the economy is cooling, with significant weakness observed in the manufacturing sector.  The main question for policymakers (and markets) is whether that weakness will spread.

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