UBS On-Air: Market Moves
CIO First Take: July FOMC meeting
Jul 31, 2024
In this discussion, Jason Draho, Head of Asset Allocation Americas, and Brian Rose, Senior Economist Americas, dive into the recent July FOMC meeting. They unpack the Federal Reserve's evolving focus on the labor market and speculate on potential rate cuts. Jason analyzes market reactions and stresses the importance of upcoming economic indicators amid inflation concerns. Their insights into strategic investment maneuvers provide listeners with valuable guidance in navigating the current financial landscape.
09:32
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Quick takeaways
- The Federal Reserve's expected interest rate cuts are influenced by a softening labor market and risks of rising inflation.
- Market reactions after the FOMC meeting indicate improved equity performance and a weakened dollar, suggesting cautious optimism among investors.
Deep dives
Federal Reserve's Rate Cut Outlook
The Federal Reserve is expected to cut interest rates in September and December, primarily due to the recent balancing of the labor market. Recent data, including a decline in quit and hiring rates, along with a slowdown in wage growth, suggests that the labor market is softening. Chairman Powell highlighted the risk of further labor market deterioration and potential layoffs if rates are not reduced, while also emphasizing the need to manage the risk of rising inflation. Market expectations reflect a strong belief that a rate cut will happen soon, even predicting the possibility of a 50 basis point cut if economic indicators align favorably.
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