The Fed Finally Pivots… Here’s What You Should Know

    Date:

    Yesterday was a big day, folks. The Federal Reserve concluded its Federal Open Market Committee (FOMC) meeting for September, announcing its long-awaited decision on key interest rates.

    If you haven’t seen the news yet, I won’t keep you in suspense. The Fed cut rates by 0.5%, and it was the first rate cut we’ve had since March 2022.

    Now, leading up to this meeting, the pressures have been mounting for a rate cut. The reality is that inflation is cooling (which we covered in last Thursday’s Market 360), and will soon be within the Fed’s 2% annual target.

    Companies aren’t as worried about inflation as they once were, either. FactSet recently noted that less than 50% of S&P 500 companies cited inflation during their second-quarter earnings calls.

    Source: FactSet

    Combining this with recent weakness in the labor market and falling Treasury yields, it was clear a rate cut was baked into the cake for September.

    In fact, while the market had assumed for months that a 0.25% rate cut was in order, there was a growing consensus that the Fed should cut rates by 0.5%. Before the announcement yesterday, CME’s FedWatch Tool showed a nearly 60% probability of a 0.5% rate cut, with the likelihood of a 0.25% rate cut at 41%.

    But to be frank with you, what I was really interested in hearing yesterday came from the committee’s “dot plot” and Fed Chair Jerome Powell’s press conference.

    The dot plot is a chart that is updated quarterly and shows where Fed officials think key interest rates will be for the rest of the year. And Powell’s comments will give a look at how the Fed feels moving forward.

    So, in today’s Market 360, let’s take a closer look at the FOMC statement, the latest dot plot chart and Powell’s comments. I’ll also share what this means for the future, and how you can benefit.

    Chart

    SignUp For Breaking Alerts

    New Graphic

    We respect your email privacy

    Share post:

    Popular

    More like this
    Related

    Bitcoin Surges Toward $90,000 on Optimism Over Trump’s Crypto-Friendly Stance

    Since the recent election we have all been an...

    Implementing Technical Indicators in Python for Trading

    The article “Implementing Technical Indicators in Python for Trading”...

    Momentum Verging on Ludicrous Mode

    For some time, we have noted that momentum trades...

    Economic Update: November 11, 2024

    Growth The U.S. economy expanded at a solid 2.8% saar,...