Market Musings 210924: Fed fires the starting gun
Market Musings 210924: Fed fires the starting gun
Fed Podcast: (click on link below)Fed: The rate-cutting cycle has started with a bang (6 min podcast)Weekly podcast: (click on link below) Investing in insurance: what's the claim? (11 min podcast)
Summary:
The Federal Reserve starts its US rate-cutting cycle with a “jumbo” 50 basis point cut (0.5%), taking its benchmark interest rate below 5% for the first time since 2023. 1. 2-year US Treasury bond yield at 3.6% points to further rate cuts to come The gap between the Fed Funds rate (blue) and the 2-year Treasury bond yield (red) remains at historic highs despite this first rate cut. The bond market is expecting the Fed to cut substantially further over the next 12 months, with the Fed themselves pointing to a 3.25% Fed Funds rate by the end of 2025. 3.25% is likely the “neutral” interest rate for the US economy, the rate at which there is neither a boost nor a drag from interest rates on growth.
Fed cuts Fed Funds interest rate to below 5%
2. Positive...
Fed Podcast: (click on link below)Fed: The rate-cutting cycle has started with a bang (6 min podcast)Weekly podcast: (click on link below) Investing in insurance: what's the claim? (11 min podcast)
Summary:
The Federal Reserve starts its US rate-cutting cycle with a “jumbo” 50 basis point cut (0.5%), taking its benchmark interest rate below 5% for the first time since 2023. 1. 2-year US Treasury bond yield at 3.6% points to further rate cuts to come The gap between the Fed Funds rate (blue) and the 2-year Treasury bond yield (red) remains at historic highs despite this first rate cut. The bond market is expecting the Fed to cut substantially further over the next 12 months, with the Fed themselves pointing to a 3.25% Fed Funds rate by the end of 2025. 3.25% is likely the “neutral” interest rate for the US economy, the rate at which there is neither a boost nor a drag from interest rates on growth.
Fed cuts Fed Funds interest rate to below 5%
2. Positive...