Bloomberg Businessweek Fed Cuts Rates, Projects Fewer Reductions Next Year
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Dec 18, 2024 Federal Reserve officials foresee only two rate cuts in 2025, tying future reductions to inflation trends. Insights reveal the implications of rate changes for banks and small businesses, highlighting the mixed signals in the economy. Discussions cover the technical levels of 10-year Treasury yields, crucial for market behavior. Meanwhile, recent elections bring cautious optimism about economic growth, prompting a closer look at emerging market winners and losers. Navigating these shifts proves critical for strategic financial planning.
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Market Reaction to Hawkish Cut
- The market wasn't fully priced for the hawkish cut, as evidenced by the 10-basis point sell-off in 10-year yield.
- The market still anticipates further cuts, possibly one more in March, before the Fed concludes its easing cycle.
Equity Market Outlook
- The bond market has lagged behind the equity market, but the robust economy supports continued equity growth.
- Focus on profit-generating sectors like big tech, as interest rate-sensitive areas face headwinds due to potential rate hikes.
Key Treasury Yield Level
- Watch the 4.5% level for 10-year Treasury yields, a crucial technical point.
- Breaking this level could trigger further volatility and a potential move towards 4.7%.