May 2025 – Bond Market Review

Recent data indicate the U.S. economy is proceeding through 2025 with slower momentum and increased uncertainty. Second quarter inflation pressures have eased, though core prices remain above target levels. The labor market shows signs of improved equilibrium, with strong hiring offset by increasingly higher jobless claims. As fiscal policies take effect, the Chandler team expects the Federal Reserve to begin a gradual normalization of monetary policy, which may coincide with a steepening the yield curve.

The Federal Reserve projected no immediate changes from the Federal Open Market Committee (FOMC) for the May meeting signaling that the Federal Funds Rate stays at the range of 4.25 - 4.50%. Fed Chair Powell continues to emphasize the Committee’s “wait and see” approach amidst an uncertain macro environment where economic data continues to show resilience, while concerns over a tariff-led increase in unemployment and inflation remain elevated.

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