Fed rate cut boosts the markets – but for how long?

Monday 07 October 2024

Global Investment Views, Equity, Fixed income

Fed rate cut boosts the markets – but for how long?

October 2024 | Capital markets whipsawed between a weakening US labor market and hopes that the Fed would successfully steer the economy towards a soft landing. Markets are optimistically interpreting the latest policy action, which could potentially boost consumption and investment. We now believe the Fed will ease policy by another 50 bps this year (75 bps previously expected), split equally between its two remaining meetings.

01 | In an environment of no recession and central banks in an easing mode, we remain slightly positive on risk assets.

02 | The US seems less concerned (for now) about fiscal deficits. The political leanings of Kamala Harris and Donald Trump are different, but neither of them seems to be bothered by high deficits.

03 | A US Federal Reserve that is inclined to cut rates deeper would give more leeway to the ECB and the Bank of England to reduce their own policy rates.

Fed rate cut boosts the markets – but for how long?

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of October 5, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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