The bond market is urging the Federal Reserve (Fed) to lower interest rates, a signal that suggests the markets are anticipating an imminent move by Chair Jerome Powell. Treasury Secretary Scott Bessent revealed this trend in his weekly meeting with Powell, highlighting the recent decrease of 2-year treasury yields below the federal funds rate. This shift signifies traders’ belief that the Fed should consider cutting rates. The impact is evident in the declining yield on the 2-year note, which has fallen to 3.7% – nearly half a percentage point lower than the Fed’s current effective rate of 4.33%. This divergence between yields and the policy rate underscores market anticipation for a rate reduction. Bessent emphasizes that this issue will be at the forefront during their upcoming meeting.