Interest Rate Cuts and Market Reactions

The first interest rate cut in September 2024, ending the Fed's hiking cycle, is anticipated to foster new mergers and acquisitions (M&A) and leveraged buyouts (LBO) activity, enhancing loan supply in public debt and direct lending markets. This follows a series of mixed economic signals that had previously hampered decisive action from the Federal Reserve. Increased loan issuance is expected as the leveraged finance markets continue to absorb newly issued corporate loans, creating a favorable environment for investors. However, fluctuating Treasury yields reveal investor frustration and the challenge of accurately predicting interest rate movements.