US economic growth is slowing to trend, roughly 2% (fourth quarter over fourth quarter). As underlying demand growth ebbs, lower rates are needed to support even this pace. The Federal Reserve’s signaling of a pause helped the recovery in equities and lowered term yields.
Investor concerns over rising risks of a downturn after 2019, stoked by developments abroad, resulted in sharply worsening financial conditions in late 2018, despite prospects for solid trend-like US growth in 2019. Helped by a more dovish-sounding Fed, a recovery in financial conditions is now supporting GDP growth near trend.