Rate Cuts Begin, but It's the Message That Matters

Investors are cheering the Fed's first rate cut in four years, but there is more to that story. Kathy Jones, Charles Schwab's chief fixed income strategist, joins host Mike Townsend to discuss what prompted the Fed to take action now, as well as what economic factors will guide how far the Fed lowers rates and how quickly they roll out additional cuts. Kathy also considers what rate cuts mean for the bond markets and shares where she sees potential opportunities for fixed income investors in this changing environment.

Mike shares his thoughts on how Congress will respond to the fast-approaching deadline to fund all government operations and avoid a shutdown. He also looks at how the presidential race is shaping up and weighs in on how the races in the Senate and the House may lead to another divided Congress. Finally, Mike examines the presidential candidates' tax proposals and explores whether they have any chance of actually becoming law.  

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

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Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.   

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.   

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.  

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.  

Lower rated securities are subject to greater credit risk, default risk, and liquidity risk. 

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. 

Tax‐exempt bonds are not necessarily a suitable investment for all persons. Information related to a security's tax‐exempt status (federal and in‐state) is obtained from third parties, and Schwab does not guarantee its accuracy. Tax‐exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax. 

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. 

Mortgage-backed securities (MBS) may be more sensitive to interest rate changes than other fixed income investments. They are subject to extension risk, where borrowers extend the duration of their mortgages as interest rates rise, and prepayment risk, where borrowers pay off their mortgages earlier as interest rates fall. These risks may reduce returns. 

Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the fund.

Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.

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