A handful of Federal Reserve officials are slated to speak throughout this week, imparting commentary and general tones regarding future interest rate cuts. Corporate leaders, such as Bank of America (BAC) CEO Brian Moynihan, are anticipating four rate cuts to come in 2024, followed by another four in 2025.

AlphaSimplex Chief Research Strategist and Portfolio Manager Katy Kaminski joins Yahoo Finance Live to discuss market expectations reacting to the possible reality of coming rate cuts.

"If you look at the yield curve today, it is steepening. So it is doing sort of what is the next phase of this trade," Kaminski says. "I think the challenges [are] that the market wants bigger cuts perhaps than what we might get... it's really not just about how many cuts, it's about how far."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

RACHELLE AKUFFO: Four cuts expected this year, four more in 2025, does this seem plausible to you? And more importantly, the reason that the Fed would have to cut that much, do you think investors are baking that in well enough?

KATY KAMINSKI: Well, I think the challenge is that there's such a wide range of different scenarios that can occur, and I think what's been interesting for us on the technical side, we've been watching the signals in fixed income, and we have gone through a massive pivotal shift from short signals to long signals and fixed income. And I want to point out and look at this today. If you look at the yield curve today, it is steepening.

So it is doing what is the next phase of this trade. So I think, hopefully, this is going to be a smooth and steady transition. I think the challenge is that the market wants bigger cuts, perhaps, than what we might get. So I'd have to agree with the CEO of Bank of America there that it's really not just about how many cuts. It's about how far, and we're going to see that steeper yield curve at some point. We're already starting to see indications in the curve as of now. I mean, take a look at that 30 year versus the 10 year today. You're seeing steepening, and that's what most people are looking for is a signal that this is actually happening.

AKIKO FUJITA: So Katy, if the expectation is that the yield curve will continue to steepen, how do you trade on that?

KATY KAMINSKI: Well, I think the key thing is really-- you can easily think about doing a steepener trade. So being long the short end of the curve for now and short the long end of the curve, which is really sort of a view that long-term rates are going to have to stabilize higher than shorter-term rates, and I think a lot of people are really looking for that trade because what's happened is, we went through an inversion in the curve.

We went to a flatter yield curve. And the next phase of this trade should be a steepener, whether or not it's going to be a steepener because cuts come first or because we have a challenging economic situation. We could also see challenge at the long end of the yield curve for various reasons, perhaps, excess supply. So a steeper yield curve is the natural next phase, and that's the typical trade for that. Long the short end. Short the long end.