"Investors expect the Federal Reserve to announce a rate cut of 25 basis points after the two-day FOMC meeting, which ends on Wednesday. Looking ahead, the CME's FedWatch Tool assigns a 95% probability to a further quarter-point cut in December. Traders will be watching closely for any guidance from Fed Chair Jerome Powell over future rate cuts, especially given growing concerns about labour market weakness."
"But perhaps the most important aspect of tomorrow's announcement will be any further details that Mr Powell provides over the ending of quantitative tightening (QT), or the Fed's balance sheet reduction programme. He signalled that this was the Fed's plan back in September. But he didn't give much guidance concerning when it would start or at what pace. Rolling back QT would mean additional monetary stimulus for markets."
"The promise of easier monetary policy from the Fed has helped push US stock indices to a succession of record highs, and this has dragged global indices up as well. Add in the prospect of a trade deal between the US and China, and expectations of strong earnings from the US tech sector, and you have a heady brew sloshing around the punchbowl."
Investors expect the Federal Reserve to announce a 25 basis point rate cut after the two-day FOMC meeting, with markets pricing a 95% probability of another quarter-point cut in December via the CME FedWatch Tool. Traders will seek guidance from Fed Chair Jerome Powell on future cuts amid growing concerns about labour market weakness. The ongoing government shutdown is limiting economic data releases and creating a more uncertain policy backdrop. Attention will focus on any details about ending quantitative tightening (QT) and the Fed's balance sheet reduction, since rolling back QT would provide additional monetary stimulus. Easing policy expectations have driven US and global stock indices higher, amplified by trade deal prospects and strong expected tech earnings, but market exuberance raises vulnerability to a sharp correction.
Read at London Business News | Londonlovesbusiness.com
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