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