Federal Reserve officials have adopted a more dovish monetary policy stance, with the probability of a 25-basis-point rate reduction at the December policy meeting jumping from 25% to 74% in one day according to CME FedWatch tool data from November 21. This dramatic shift followed comments from key policymakers including New York Fed President John Williams and Governor Stephen Miran, who characterized recent inflationary concerns as overblown while highlighting rising downside risks to employment amid a cooling labor market.
Williams specifically noted that while Trump administration tariffs have contributed to higher prices, the levies are "not expected to lead to persistent inflation," emphasizing the need to balance inflation control with maximum employment goals. The probability of a rate cut continued to climb, with decentralized prediction platform Polymarket reporting odds surging to 81% just days after the initial report, up from 67% the day before and 44% one week prior.
Major financial institutions including JP Morgan and Goldman Sachs have realigned their interest rate outlooks, with both now forecasting the Fed will deliver a quarter-point cut this month. JP Morgan notably reversed its earlier prediction of a pause until January. As of recent data, the odds of a quarter-point cut stand at 87.2%, up from 84.7% just one session earlier.
This accommodative policy shift has significant implications for income-focused investors, as a rate cut would reduce the risk-free yield, forcing those seeking greater returns to accept greater risk. Infrastructure Capital's Bond Income ETF (ARCA: BNDS) may see increased interest under these conditions, with the actively managed fund designed to maximize current income while pursuing capital appreciation opportunities primarily through fixed-income securities, mostly corporate bonds.
The BNDS ETF employs an active credit selection process that goes beyond traditional credit ratings or benchmark indices, utilizing a proprietary protocol to identify undervalued fixed-income securities relative to their fundamentals. The fund targets companies with strong profitability and access to capital, achieving a hybrid exposure comprising approximately 84% toward fixed income and 16% toward preferred securities. As of November 28, 2025, the fund reported a 30-Day Sec Yield of 7.52%.
What distinguishes the BNDS ETF is its active management approach to addressing market non-ergodicity—the phenomenon where circumstances like volatility spikes can disrupt expected compounding associated with steady returns. Portfolio Manager Jay D. Hatfield, leveraging nearly three decades of experience across investment banking, energy infrastructure, real estate, and research, identifies and exploits mispricings that occur when fundamentals become divorced from intrinsic value due to sudden shifts in liquidity, spreads, and rate expectations.
This active management approach becomes particularly valuable in the current environment, as the Fed's potential policy shift creates new dynamics in credit markets where traditional passive strategies may struggle to adapt. The BNDS ETF's monthly distribution cycle aligns conveniently with most financial obligations, while its income-first mandate focuses on delivering above-market income through rigorous evaluation of enterprise value, capital ratios, operating metrics, and credit-relevant correlations.
