Fiscal Deficits' Impact on Treasury Yields

At last week's remarkable Federal Reserve meeting, the Fed's decision to cut the baseline interest rate for the first time in 2025 took a backseat to questions over which members would get to vote at the meeting. On this episode, Kathy Jones, Schwab's chief fixed income strategist, joins host Mike Townsend to break down the Fed's struggle to balance inflation concerns with a softening job market—and what they might do if they get it wrong. They also look at the political drama surrounding Fed Governor Lisa Cook and the controversial confirmation of Stephen Miran to the Fed board, spotlighting serious questions about the central bank's independence and the broader implications for financial markets. Kathy shares her insights on the bond market, including the impact of fiscal deficits, Treasury yields, and the weakening dollar. She offers practical considerations for bond investors in a time of uncertainty, emphasizing the importance of a bond's term and quality. 

And Mike provides the latest on two key issues in Washington: the growing risk of a government shutdown and the debate over the future of corporate-earnings-reporting requirements.

WashingtonWise is an original podcast for investors from Charles Schwab. For more on the series, visit schwab.com/WashingtonWise.

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