Daily analysis 09/26/2024

26. 9. 2024 - Josef Brynda

Latest news

• The yen weakened to 145 against the dollar.
• The Swiss National Bank is expected to cut rates, with focus on their language regarding franc strength.
• Sweden's Riksbank cut rates for the third time and guided for further cuts this year.
• Markets are pricing in a 50% probability of an ECB rate cut in October.
• The US dollar traded higher, supported by short covering and safe-haven appeal.
• Activity currencies led losses against the US dollar, with kiwi and Aussie dollars declining.
• The Euro traded lower after once again finding formidable resistance around 1.12 against the dollar.
• Investors await Fed Chair Powell's comments for insights on potential future rate adjustments.
• Key economic data, including Durable Goods Orders and GDP growth figures, will be released this afternoon.
• Japanese yen and Swiss franc were in red despite being safe-havens.
• The kiwi dollar plunged back below 63 cents.
• The Aussie dollar fell back below 0.6850.
• US new home sales data could impact USD sentiment.
• China's potential injection of 1 trillion yuan into state banks may affect CNY and related currencies.
• Crude oil price drop could influence commodity-linked currencies.
• European sovereign bond yields rising may impact EUR and other European currencies.
• US Treasury yield movements could affect USD strength.
• Gold holding near record levels despite USD recovery may influence gold-linked currencies.
• Focus returns to the Fed as Chair Powell and NY Fed's Williams are set to speak.
• Weekly US jobless claims data release could impact USD and overall forex market sentiment.
• US new home sales fell 4.7% in August but were above expectations.
• European equities are up 1.4%, driven by gains in ASML and LVMH.
• US futures indicate a 0.7% higher open.
• In the options market, Nvidia, Tesla, and Apple continue to dominate, joined by Intel, Micron Technology, and Meta Platforms.

News summary

• The forex market experienced significant movements across various currency pairs. The Japanese yen weakened to 145 against the dollar, while the Swiss franc and other safe-haven currencies unexpectedly declined despite their typical resilience. This shift suggests a complex interplay of factors affecting traditional safe-haven assets. Meanwhile, the US dollar traded higher, benefiting from short covering and its safe-haven appeal, which put pressure on other major currencies.
• European central banks are making notable policy shifts. The Swiss National Bank is anticipated to cut rates, with markets closely watching their language regarding franc strength. Sweden's Riksbank has already cut rates for the third time and signaled further cuts this year. Additionally, there's a 50% probability priced in for an ECB rate cut in October. These developments are likely to impact the EUR/USD, EUR/GBP, and other euro-related pairs, potentially weakening the euro in the short term.
• Activity currencies faced significant losses against the strengthening US dollar. The New Zealand dollar (kiwi) plunged below 63 cents, while the Australian dollar fell below 0.6850. This trend affected pairs such as AUD/NZD, AUD/CAD, and AUD/USD, with commodity-linked currencies particularly vulnerable due to falling crude oil prices. The euro also traded lower after encountering strong resistance around 1.12 against the dollar, impacting the EUR/USD pair.
• Investors are keenly awaiting comments from Fed Chair Powell and upcoming economic data, including Durable Goods Orders and GDP growth figures. These factors could significantly influence USD pairs like USD/CAD and EUR/USD. Additionally, the potential injection of 1 trillion yuan into Chinese state banks may affect CNY and related currencies, potentially impacting AUD/USD and NZD/USD due to China's economic influence on these commodity currencies.
• In the broader financial landscape, European equities are up 1.4%, driven by gains in key stocks like ASML and LVMH. US futures indicate a higher open, which could influence risk sentiment in the forex market. The options market activity in tech stocks like Nvidia, Tesla, and Apple may also indirectly affect currency pairs through overall market sentiment.
• The movement in bond yields, with European sovereign bond yields rising and potential shifts in US Treasury yields, could have significant implications for currency pairs. Rising yields typically strengthen a currency, potentially supporting the euro against other currencies in pairs like EUR/GBP and EUR/USD, while movements in US yields could further bolster or weaken the dollar's position.
• Lastly, the resilience of gold prices near record levels, despite the USD recovery, may influence gold-linked currencies and overall forex market dynamics. The upcoming speeches by Fed Chair Powell and NY Fed's Williams, along with the release of weekly US jobless claims data, are expected to provide further direction for the USD and overall forex market sentiment, potentially causing volatility across major currency pairs.
   

What's moving markets

25. 9. 2024 - Josef Brynda

Market Overview

• S&P 500 futures -0.2%, Dow futures -0.2%, Nasdaq 100 futures -0.4% following S&P 500's record high.
• US consumer confidence unexpectedly dropped in September due to labor market concerns.

Federal Reserve Focus

• Fed Governor Adriana Kugler to speak, markets await her stance on recent rate cut.
• Contrasting views among Fed officials: Bowman defended smaller cut, others supported larger reduction.

Corporate News

• US government probing SAP and Carahsoft for potential price fixing in government sales.

Commodities

• Gold hit record $2,670.43/oz before slight retreat, supported by rate cut expectations.
• Oil prices dipped: Brent -0.5% to $74.08, WTI -0.7% to $71.08, as traders reassess China's stimulus impact.

These developments may influence forex markets, affecting USD strength, commodity currencies, and overall market sentiment.

Daily analysis 09/25/2024

25. 9. 2024 - Josef Brynda

Latest news

• Chinese equities are rising due to a significant stimulus package, which could impact global currency markets.
• Growing expectations of rate cuts in both Europe and the U.S. are driving yields lower, which could affect currency valuations.
• The Riksbank's policy decision and U.S. new home sales data are upcoming economic events that may influence forex markets.
• Australia's August CPI eased to 2.7%, potentially setting up a dovish pivot at the RBA's November meeting, which could impact the Australian dollar.
• U.S. consumer confidence showed worries about the labor market, which is a key focus for the Fed and could influence USD movements.
• Fed Governor Bowman's hawkish stance contrasts with Governor Waller's dovish view, creating uncertainty in future Fed policy decisions.
• The European Central Bank (ECB) is now seen as having a 60% chance of a quarter-point rate cut as soon as October, potentially affecting the euro.
• Industrial metals have jumped on China's stimulus, which could impact commodity-linked currencies.
• Crude oil prices are struggling to gain a foothold above key levels despite Middle East tensions and China stimulus, potentially affecting oil-linked currencies.
• The risk-on environment got another boost from China's stimulus measures, weakening the US dollar across the board.
• The Japanese yen underperformed in the risk-on environment, also affected by BOJ's cautious stance on further rate hikes.
• Volatility is easing, with the VIX down to 15.39, which could impact currency pair movements.
• Tesla's high IV Rank in options trading suggests potential for increased volatility, which could spill over into currency markets.
• Attention may remain on global news and geopolitical events, which often drive forex market movements.
• The German yield curve steepened, with the two-year yield dropping to its lowest level since 2022, potentially impacting the euro.
• UK gilt yields rose slightly as Andrew Bailey remained cautious about future rate cuts, which could affect GBP movements.
• Silver jumped but struggled above USD 32, supported by industrial metals and gold reaching a fresh record, potentially impacting precious metal-linked currencies.
• The Bloomberg Commodity Total Return Index is up 4.7% on the month, which could influence commodity currencies.
• Micron Technology's earnings report could provide insights into global demand, potentially affecting tech-heavy currencies.
• Spotify's shares rose on TikTok exiting the music streaming business, which could impact tech sector performance and related currencies.
• Saab shares plunged 9% on slowing momentum, highlighting potential shifts in the defense sector that could affect certain currencies.
• The Australian dollar was choppy following mixed signals from the RBA, but eventually pushed above 0.69 overnight before retreating.
• The Australian and New Zealand dollars reached multi-month highs, while the yuan hit its strongest level in over a year, driven by China's aggressive stimulus package.
• The U.S. dollar faced pressure due to China's stimulus measures and growing expectations of another large U.S. rate cut in November.
• Australian consumer prices slowed to a three-year low in August, with core inflation hitting its lowest since early 2022, potentially influencing AUD movements.
• China's latest support measures, including outsized rate cuts and stock market aid, boosted investor sentiment globally.
• The People's Bank of China lowered the cost of medium-term loans to banks, further supporting easing measures.
• Sterling advanced to levels not seen since March 2022, supported by less aggressive rate cut expectations from the Bank of England compared to the Federal Reserve.
• Markets are pricing in a 59.5% chance of a 50-basis-point rate cut at the Fed's next policy meeting, up from 37% a week ago.
• U.S. consumer confidence unexpectedly fell in September, raising concerns about the labor market's health.
• The dollar index approached a more than one-year low, experiencing its largest one-day percentage fall in a month.
• The euro neared a 13-month high, while the yen slightly weakened against the dollar.

News summary

• The recent announcement of a significant stimulus package in China has sparked a rally in Chinese equities, which is likely to have far-reaching effects on global currency markets. This stimulus is expected to boost the Chinese yuan, which has already hit its strongest level in over a year. The Australian and New Zealand dollars, closely tied to China's economic performance, have reached multi-month highs as a result. This development could lead to continued strength in commodity-linked currencies, particularly those of countries with strong trade ties to China.
• Growing expectations of rate cuts in both Europe and the U.S. are driving yields lower, which is likely to have a significant impact on currency valuations. The European Central Bank (ECB) is now seen as having a 60% chance of a quarter-point rate cut as soon as October, potentially weakening the euro in the short term. However, the euro has neared a 13-month high against the dollar, suggesting that the relative pace of rate cuts between the ECB and the Fed will be crucial in determining the EURUSD pair's direction.
• In the U.S., markets are pricing in a 59.5% chance of a 50-basis-point rate cut at the Fed's next policy meeting, up from 37% a week ago. This expectation, coupled with concerns about the U.S. labor market following unexpected declines in consumer confidence, could further weaken the USD against major currencies.
• The jump in industrial metals prices due to China's stimulus is likely to have a positive impact on commodity-linked currencies. The Australian dollar, in particular, could benefit from this trend, potentially seeing further gains in pairs like AUDUSD and AUDNZD. However, the mixed signals from the Reserve Bank of Australia (RBA) and the recent easing of inflation to a three-year low in August could introduce some volatility to AUD pairs.The New Zealand dollar has also strengthened on the back of the Chinese stimulus, which could lead to interesting movements in pairs like NZDCAD. The Canadian dollar's performance may be more nuanced, as it balances the positive impact of industrial metal prices against the struggling crude oil prices, which are failing to gain a foothold above key levels despite Middle East tensions.
• Sterling has advanced to levels not seen since March 2022, supported by less aggressive rate cut expectations from the Bank of England compared to the Federal Reserve. This could lead to further strength in pairs like EURGBP, especially if the ECB moves faster on rate cuts than the BoE.The German yield curve steepening, with the two-year yield dropping to its lowest level since 2022, could add pressure to the euro. However, the currency's performance against the dollar (EURUSD) may remain strong if the Fed is perceived as more dovish than the ECB.
• The Japanese yen has underperformed in the current risk-on environment, also affected by the Bank of Japan's cautious stance on further rate hikes. This could lead to weakness in yen pairs, particularly against currencies benefiting from the improved global economic outlook.
• The forex market is currently being driven by a complex interplay of factors, including China's stimulus, shifting interest rate expectations, commodity price movements, and varying central bank stances. Traders should closely monitor upcoming economic events such as the Riksbank's policy decision and U.S. new home sales data, as well as geopolitical developments, as these could introduce further volatility into currency pairs. The overall trend appears to favor risk-on currencies and those benefiting from China's economic boost, while safe-haven currencies like the USD may face continued pressure in the near term.

Could 2024 be another 1995 for banking?

23. 9. 2024 - Josef Brynda

The start of a new rate-cutting cycle at the Federal Reserve has bank investors hoping for a return to 1995.

That was the year the banking industry began one of its best runs in US history following a series of new rate cuts from the Fed and a soft landing engineered by then-central bank chair Alan Greenspan.

An index broadly tracking the sector finished 1995 up more than 40%, outperforming the S&P 500 (GSCP). And that outperformance would hold for two more years.

Could it happen again?

So far, bank stocks are off to a good start. This year, the same banking industry index that soared in 1995 (^BKX) is up more than 19%, just behind major stock indexes.

Meanwhile, another index (XLF) tracking big banks along with other major non-bank financial firms is up 21%, just ahead of major indexes.

"History isn’t likely to repeat, but it may rhyme," Mike Mayo, a Wells Fargo analyst who covers the country’s largest banks, said of the 1995 comparison.

Mayo isn’t counting on next year being as good as that mystical year, but he does see similarities.

Daily analysis 09/23/2024

23. 9. 2024 - Josef Brynda

Latest news

• The Federal Reserve cut interest rates by 50 basis points, leading to a decline in the US dollar for the third consecutive week.
• The Japanese yen underperformed, declining over 2% against the US dollar, as the Bank of Japan surprised markets with dovish rhetoric.
• Gold prices hit a record high of $2,621.88, marking a 26% increase in 2024, driven by expectations of US interest rate cuts and Middle East tensions.
• The Bank of Japan kept its interest rates unchanged at 0.25%, with Governor Ueda's dovish remarks indicating caution on further rate hikes.
• China's loan prime rates were kept steady, with officials likely waiting to see the effects of July's cut before making the next move.
• The euro is trading below the key 0.84 level against the British pound, a level that has held since 2022.
• Activity currencies such as the Norwegian krone, Australian dollar, and British pound led gains in the forex market.
• The Swiss franc ended the week lower as markets were in a risk-on mode following the Fed's rate cut.
• US stocks closed mixed on Friday, with the S&P 500 and Nasdaq slipping 0.2% and 0.3% respectively, while the Dow Jones rose slightly.
• Treasury yields ended mixed on Friday, with front-end yields slightly richer and longer-dated yields cheaper.
• The average junk bond yield fell to 6.96%, its lowest since April 2022, prompting companies to continue issuing debt.
• US natural gas futures rose ahead of October contract expiration, with focus shifting to winter demand.
• The US rig count decreased by 2 to 588, according to Baker Hughes.
• Apollo offered to invest $5 billion in Intel, following Qualcomm's interest in acquiring the chipmaker.
• FedEx shares plunged 15.2% after weak earnings and a lowered revenue forecast.
• Nike shares surged 6.9% following the appointment of Elliott Hill as the new CEO.
• CrowdStrike surged 8% after an analyst maintained an overweight rating on the stock.
• Upcoming macro events include flash PMIs for the Eurozone, UK, and US, as well as the US Chicago Fed National Activity Index.
• Fed Governor Waller acknowledged that core inflation is running beneath the Fed's target. He mentioned that August inflation numbers suggest core PCE rose 0.14%, and if annualized over the last four months, inflation is running at less than 1.8%. This acknowledgment could influence future Fed decisions and, consequently, the U.S. dollar's performance.
• At least nine Fed policymakers are speaking this week, including prepared remarks from Chair Jerome Powell. These speeches will be closely watched by forex traders for hints on future monetary policy direction. Any unexpected comments could lead to significant moves in dollar pairs.
• China stimulus hopes have risen after the PBoC lowered the 14-day reverse repurchase rate. The central bank governor Pan Gongsheng will hold a press conference on Tuesday on financial support for economic developments. These developments could impact the yuan and other Asian currencies.
• The market is currently pricing in 200bps of rate cuts by 2025 for the Fed, one more than projected by the Fed's dot plot. This discrepancy between market expectations and Fed projections could lead to volatility in dollar pairs. Any shift in these expectations could cause significant forex market movements.
• European Central Bank President Christine Lagarde and other officials will speak throughout the week. Markets will be closely watching for policy hints from these speeches. Any unexpected comments could move the euro against other major currencies.
• The focus for U.S. Treasuries is on Friday's Personal Consumption Expenditures (PCE) price index. The core PCE is expected to remain steady at 0.2%, pushing the annual measure to 2.7%. This data could influence Fed policy expectations and, by extension, the dollar's performance.
• For Europe, key data includes Eurozone, German, and French Purchasing Managers' Index (PMI) releases on Monday. This will be followed by Germany's IFO Business Climate Index on Tuesday. These economic indicators could significantly influence the euro's performance in forex markets.
• Crude oil has extended gains on Middle East tensions and China stimulus hopes, with Brent trading near USD 75. This key level, once broken earlier this month, helped trigger a slump below USD 70. Oil price movements can significantly impact commodity-linked currencies like the Canadian dollar and Norwegian krone.
• Chicago wheat futures are being supported by dry weather curbing production prospects in Europe, UK, and the Black Sea region. This could impact agricultural commodity-linked currencies. Any significant moves in wheat prices could influence currencies of major wheat-exporting countries.
• Copper reached a two-month high last week, supported by signs of an improved demand outlook in China. Rising premiums on imported copper and falling inventories on the SHFE are contributing to this trend. These developments could impact the Australian dollar and other currencies linked to copper-exporting economies.
• Volatility remains subdued in the equity markets, with the VIX slightly down to 16.15. However, expected moves based on options pricing suggest potential for significant swings in major indices. While this primarily affects equity markets, it could also impact risk sentiment in forex markets.
• In the options market, tech giants like Nvidia, Apple, Tesla, and Intel were the most traded on Friday. While this primarily affects equity markets, significant moves in these stocks can influence overall market sentiment. This sentiment often spills over into forex markets, particularly affecting risk-on and risk-off currency pairs.

News summary

• The global financial landscape has seen significant shifts in recent days, with major central banks making key decisions and economic indicators shaping market sentiment. The Federal Reserve's surprising 50 basis point rate cut has sent ripples through currency markets, leading to a third consecutive week of decline for the US dollar. This move has particularly impacted the USD/JPY pair, as the Japanese yen simultaneously faced pressure from the Bank of Japan's unexpectedly dovish stance. The divergence in monetary policy between these two major economies could lead to continued volatility in the USD/JPY pair, potentially pushing it higher in the near term
• Meanwhile, the euro has been struggling against the British pound, trading below the key 0.84 level - a threshold that has held since 2022. This weakness in the EUR/GBP pair reflects the relative strength of the UK economy and the more hawkish stance of the Bank of England compared to the European Central Bank. The upcoming flash PMIs for both the Eurozone and the UK will be crucial in determining the near-term direction of this currency pair. Strong UK data could further strengthen the pound against the euro, while any positive surprises from the Eurozone might help the euro regain some ground.
• In the commodity currency space, the Australian dollar and Norwegian krone have been leading gains. The AUD has been buoyed by rising copper prices and signs of improved demand from China, Australia's largest trading partner. The potential for further Chinese stimulus measures could provide additional support for the AUD, particularly against currencies of countries with less exposure to Chinese growth, such as the USD or EUR. The NOK, on the other hand, has benefited from rising oil prices, with Brent crude approaching the key $75 level. 
• The Canadian dollar, another commodity-linked currency, may also see positive momentum from higher oil prices. However, its performance against the USD might be more muted due to the close economic ties between Canada and the United States. The CAD/JPY pair could be an interesting one to watch, as it combines the potential strength of the CAD from oil prices with the weakness of the JPY from the Bank of Japan's dovish stance.
• Gold prices have hit record highs, driven by expectations of US interest rate cuts and geopolitical tensions in the Middle East. This surge in gold prices often correlates with weakness in the US dollar, particularly against safe-haven currencies like the Swiss franc. However, the current risk-on sentiment in the market has somewhat dampened the franc's performance. 
• Looking ahead, the forex market will be closely watching the numerous Fed policymaker speeches scheduled for this week, including remarks from Chair Powell. Any hints about future monetary policy could cause significant moves in USD pairs across the board. Additionally, the Personal Consumption Expenditures (PCE) price index release on Friday will be crucial for the dollar's performance, as it could influence expectations for future Fed rate decisions.
• In Europe, speeches from ECB President Christine Lagarde and other officials will be closely monitored for their potential impact on the euro. Any shift in tone regarding future policy could move EUR/USD and other euro crosses. The upcoming economic indicators, including PMIs and Germany's IFO Business Climate Index, will also be key in shaping the euro's near-term trajectory against major peers like the USD, GBP, and JPY.

Daily analysis 09/19/2024

19. 9. 2024 - Josef Brynda

Latest news

• The Federal Reserve cut interest rates by 50 basis points, taking the target for the federal funds rate to 4.75-5.00%.
• The Fed's dot plot showed the 2024 median rate forecast was revised down to 4.4% from 5.1%, implying further easing.
• Fed Chair Powell stressed that the Fed is not on a pre-set path and decisions will be taken on a meeting-by-meeting basis.
• The Bank of England decision is due today, with no change in interest rates expected.
• The market is pricing in 50 basis points of rate cuts for the Bank of England through to the end of the year.
• Australia's unemployment rate remained steady at 4.2% in August, with the labor market still operating close to recent historical tightness.
• The Australian bond market lowered the prospect of a rate cut before year-end from 85% to 70%.
• The Norges Bank is expected to keep rates unchanged at 4.5%.
• US Initial Jobless Claims are expected to come in at 230k.
• The Japanese yen weakened past the 143 level against the USD for the first time in ten days.
• Focus will turn to the Bank of Japan announcement due on Friday, where plans for further hiking could bring another leg of support for the yen.
• The New Zealand dollar and British pound outperformed despite USD gains.
• The Australian dollar rose after a robust jobs report.
• The US dollar initially slipped significantly on the Fed's jumbo rate cut but quickly retraced the losses.
• Traders are now pricing in around 70 basis points of additional cuts for the rest of the year for the Fed.
• European sovereign bonds sold off, with German 10-year yields rising by 5 basis points to 2.19%.
• UK 10-year gilt yields climbed 8 basis points as traders reduced their expectations of Bank of England rate cuts.
• China is widely expected to trim its main policy and benchmark lending rates on Friday.
• The forex markets saw choppy trading following the Fed's rate decision.
• Governor Bowman opted to vote for a smaller 25bp rate reduction, dissenting from the Fed's decision.
• Powell remained upbeat on the economy despite signs of loosening labor market, indicating that the bigger rate cut comes from a position of strength.
• The clear message is that achieving a soft landing remains the Fed's key objective, which could impact currency movements.

News summary

• The Federal Reserve (Fed) surprised markets with an aggressive 50 basis point interest rate cut, setting the target range for federal funds at 4.75-5.00%. This move, along with a revised dot plot indicating further rate cuts, signals a looser monetary policy in the U.S. However, Fed Chair Jerome Powell emphasized that the central bank is not on a pre-set course, and decisions will be made based on current data.
• The U.S. dollar has traded on the weaker side throughout Q3, largely in anticipation of the Fed's rate cuts. However, the narrative of U.S. economic exceptionalism remains intact, a point emphasized by Fed Chair Jerome Powell’s remarks on the economy's resilience. While the "Dollar Smile" theory suggests the dollar could weaken in a soft-landing scenario, this would require other major economies to outperform the U.S.—a condition that currently seems unlikely. The Eurozone, China, and even Canada (now facing deflation) are showing no signs of eclipsing U.S. economic strength, despite some slowing in American growth.
• That said, the dollar's trajectory remains data-dependent. Periods of weakness are possible if certain parts of the U.S. economy falter, but a sustained, structural selloff seems improbable. In fact, a broader global slowdown could bolster the dollar via haven demand. Moreover, upcoming U.S. elections could add volatility, with fiscal policy, tariffs, and geopolitical risks all influencing the currency’s direction. At this stage, the risk-reward remains tilted in favor of dollar strength rather than weakness and the outlook is balanced.
• The initial reaction of the dollar to the Fed's decision was negative, but the losses were quickly erased, suggesting that markets had largely anticipated the easing of monetary policy. Still, the dollar may face short-term pressures, especially if further economic data supports a soft-landing scenario.
• The Australian dollar strengthened following the release of a solid employment report, which reduced the likelihood of rate cuts before the end of the year. This strengthening could continue, particularly against currencies of countries with looser monetary policy
• Increased volatility is expected in forex markets as investors reassess their positions in response to divergent monetary policies of major central banks. It will be key to monitor economic data, particularly regarding inflation and labor markets, which will influence future central bank decisions. Currencies of countries with more robust economic fundamentals and tighter monetary policies may outperform others in the coming months.

Powell Warns Not to See Half-Point Cut as Fed’s New Pace

18. 9. 2024 - Josef Brynda

The Fed has cut interest rates by 50 basis points, marking the arrival of a long-anticipated event. The central bank has indicated a continued inclination towards further rate cuts. The market’s reaction to this move will be particularly interesting to watch, as several scenarios could unfold.

While Chairman Powell has emphasized that there are no clear signs of a recession, the market may perceive this rate cut as a preemptive "emergency brake" to prevent economic downturn. On the other hand, it could stimulate markets, as lower interest rates may make financial conditions more attractive for both consumers and businesses, potentially boosting economic activity.

This delicate balance between market perception and actual economic conditions will be critical in shaping future monetary policy and investor sentiment.

• Fed cuts rates by half point in bid to defend economy
• Bowman dissents in a first by a Fed governor since 2005
• Powell warns not to see half-point cut as Fed’s new pace
• Fed’s growth and inflation forecasts signal soft-landing view    

"The Fed delivered what the market wanted. The market is happy with the Fed. Market is still ahead of the Fed a bit, pricing 75 bps for the year. With unemployment and PCE estimates very close to (the current levels), it’s easy for them to (cut more) than what is in the dots." --Xe Xie

Fed to Kick Off Rate Cuts, Signal Next Steps

18. 9. 2024 - Josef Brynda

The Federal Reserve is widely expected to lower interest rates this week after holding borrowing costs at a two-decade high for more than a year.

By how much, however, remains an open question.

Forecasters largely anticipate the Federal Open Market Committee will reduce rates by a quarter point to a range of 5% to 5.25%, though economists at JPMorgan Chase & Co. expect a bigger, half-point move. Investors see better-than-even odds of a half-point adjustment.