Markets, analysts are divided by the size of the first cut by Investing.com
Investing.com — Like the Federal Reserve's The September meeting is approaching, analysts and the market againThe main ones are divided by the size of the expected rate cut, some favor a 25-basis-point (bp) reduction and others raise the power big ones 50-bp cut.
BCA research argues that while the 50-bp cut is still in play, it may have been telegraphed by Fed officials before closing time. New York Fed President John Williams and Governor Christopher
Waller did not show a jumbo cut, leaving BCA to expect a 25-bp cut. Despite this, futures markets have raised the odds of a 50-bp rate cut to 48%, driven by a Wall Street Journal article and comments from former New York Fed President William Dudley saying “strong case” Of course big ones deliver.
HSBC echo the sentiment of a 25-bp cut in September, followed by another 50 bps cut in 2024.
HSBC remains focused on US Treasuries and maintains a strong US outlook dollar, despite anticipating some global market volatility The Fed's policy approach.
Bank of America highlights i “extraordinary uncertainty” around the The Fed's next move. The market is pricing in a 36% chance of a 50-bp cut, but BofA is leaning toward a 25-bp cut, noting that the Fed has not indicated big ones go before you turn off.
BofA also expects Fed Chairman Jerome Powell to address labor market risks in his press conference it is possible show a willingness to accelerate rate cuts if necessary.
Barclays expects a 25-bp cut but sees the potential to big ones cuts if labor market conditions worsen. They make a total of 75 bps in cuts in 2024.
Barclays says: “We await an upbeat FOMC statement that notes further progress on inflation, that upside risks to inflation have receded and employment risks have increased, and that the committee is closely monitoring the risks of unwanted volatility in labor market conditions. We expect the statement to indicate that future corrections will depend on data, opinion again balance of risks.”
Finally, JPMorgan highlights the request for a 50-bp cut, arguing that front-loading the cuts would better position the Fed to deal with future economic risks.
However, they agree that the internal strength of the FOMC may push the Fed to take a more straightforward 25-bp approach.
“What the FOMC will do is unclear, but we are sticking to our call that they will do the “right thing” and cut 50bp,” JPMorgan wrote. “We expect that the average dot this year will be 100bp lower than the current rate of 5-3/8%, which leads to two reductions of 25bp in the last two meetings of the year.”
