Week Ahead Market Commentary – September 16, 2024
Rate Cycle To Shift This Week – Stocks Positioned To Rally
The Federal Reserve (Fed) is meeting this week to determine the state of the economy and inflation.
The Federal Reserve (Fed) is meeting this week to determine the state of the economy and inflation. The cross-market expectation is that the Fed will begin a rate cutting cycle – but there is a debate as to whether it will start with a cut of 25 basis points (bps) or 50 bps.
We believe that, because the economy is relatively robust, the Fed will begin with 25 bps only. The market is also expecting that rate cuts will continue with 25 bps cuts in November and December as well.
The market has already priced in the change in direction in interest rates with 2-Year Treasury yields falling sharply after the August employment report.
Technically, 2-Year Treasury yields can fall to 2.0%-1.5% – which is likely what we’ll see next year. If you have not locked in a 5% rate at the short end of the curve, your time is running out.
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