Forex Ninja Trader’s Post

Federal Reserve announced a 25 basis point reduction in the federal funds rate, bringing it to a target range of 4.50% to 4.75%. This marks the second consecutive rate cut since the onset of the COVID-19 pandemic, following a 50 basis point reduction in September. #Market_Reactions: #Stock Markets: Following the Fed’s announcement, major U.S. stock indices experienced modest gains. The S&P 500 rose by +0.6%, while the Nasdaq Composite increased by +1.3%. #Bond Markets: The bond market’s response was relatively muted, with yields showing minimal movement, indicating that investors had largely anticipated the rate cut. #Currency Markets: The U.S. dollar experienced slight fluctuations but remained relatively stable post-announcement, reflecting the market’s expectation of the Fed’s move. #Economic Indicators: Recent data indicates that core inflation rose more than expected in September, marking the largest monthly gain since April. This uptick in inflation may influence the Federal Reserve’s future monetary policy decisions.

The S&P 500 index edged up 0.2% last week and recorded a 2.3% monthly gain amid optimism for Federal Reserve officials to deliver an interest-rate cut in September. The S&P 500 ended at 5,648.40 on Friday, marking the third straight weekly gain and the fourth monthly gain in a row.   August was the S&P's seventh positive month of 2024 with the only decline in April. The index is up 18% this year. Gains in recent weeks have been spurred partly by speculation the Fed's policy-setting committee will begin cutting rates at the September meeting. Fed Chair Jerome Powell said last week "the time has come" for rate cuts. Find out more from Joe Pay in this week's #CarnegieMarketMinute! #marketcommentary #investing #stockmarket #marketnews

Interest Rate Cuts Incoming: What Will Markets Do? 👀 All eyes are on The Fed (US Federal Reserve) on September 18, just under 2 weeks away. The market is expecting the Fed to move a pause in interest rate hikes to the next phase of cutting interest rates - with rate cuts expected in September, possibly followed by another in December. The consensus among investors points to a 25 basis point cut at the US Federal Open Market Committee (FOMC) meeting in mid-September, although some anticipate a larger 50 basis point cut. We turn to history to see what happens to stock markets after interest rate cuts. When the Federal Reserve (Fed) cuts interest rates during an economic expansion, historical data suggests that both equity and Treasury markets have the potential to perform positively. This raises the critical question of how the stock market will react to the first cut: Will it spark further bullish sentiment, or will investors grow cautious, interpreting it as a sign of an economic slowdown?

The Federal Reserve lowered the benchmark interest rate to a range of 4.25%-4.5% but reined in the number of cuts they expect in 2025, signaling greater caution over how quickly they can continue reducing borrowing costs. Driving the news: Officials now see it taking until 2027 for inflation to reach their 2% target. As a result, Jerome Powell made clear that any rate adjustments will hinge on further progress in cooling price increases. Be Smart: The stronger focus on inflation is a significant shift in strategy from September when officials saw labor market softening as the greater risk. Recent data and some of President-elect Trump’s policies have reignited inflation concerns. Dot plot catches up to bond market: The median policymaker now sees just 50 bps of reductions next year, half of what was expected in September. Market reaction: Stock sold off swiftly. The S&P 500 Index plunged 3% for its worst “Fed Day” since March 2020. Treasury yields soared on the news, marking their biggest hawkish move on a Fed decision day since 2013. Fear rippled through the market, with the VIX, leaping to 28. Heard on the Street: Powell: “When the path is uncertain you go a little bit slower. It’s not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down.” (WSJ)

🇺🇸 FED follows suit 🇺🇸 Yesterday the FED followed suit in dropping interest rates by a quarter percent. This has subsequently caused a market reaction by selling off US equities. FED also confirms that we will see less aggressive than planned cuts in 2025. #FED #US #FiscalPolicy #Finance #FT

In this week's market update, "Markets Sell Off Following Hawkish Fed Meeting", our Wealth Management team analyzes market activity from the past week. Markets ended the week lower, driven by hawkish projections and comments from the Fed. The S&P 500 declined -2.0%, the Nasdaq 100 fell -2.3%, and the Russell 2000 dropped -4.4% on the week. Treasury yields rose sharply across the curve for the second straight week. On Wednesday, the Federal Open Market Committee voted to reduce the federal funds rate by 25 basis points to a range of 4.25-4.50%, as expected. However, one member dissented in a rare occurrence. In his post-meeting press conference, Fed Chair Powell emphasized that inflation has been stickier than expected. Equities fell sharply on the day of the meeting. Read more and download the full Weekly Market Update: https://trst.in/i9jJqd

After months of a "higher for longer" mentality, traders are finally betting that the Federal Reserve will cut interest rates. This can be seen in the fall in the 2-year Treasury yield, which fell from 3.86% to 3.79% between 8am and 5pm (as of September 4th). Although this is a modest intraday move, it reflects a broader shift in market sentiment over time. Coupled with dovish comments from Fed Chairman Jerome Powell at Jackson Hole, the market is increasingly pricing in rate cuts and the possibility of a soft landing, which was previously thought to be unlikely. Traders have been anticipating rate cuts since the summer, which is reflected not only in the falling yield on the US 2-year Treasury note (5.03% on May 1st vs. 3.76% today), but also in the falling yield on the 2-year Gilt. According to Bloomberg, the 2-year gilt is one of the most sensitive securities to changes in monetary policy. But why do gilt yields, and bond yields in general, fall when a rate cut is expected? When interest rates are expected to rise, bond yields rise because newly issued bonds offer higher interest rates, making existing bonds with lower interest rates less attractive. As a result, investors sell existing bonds, pushing their prices down and yields up. However, when a rate cut seems likely, the opposite happens. Investors buy bonds in anticipation of lower future interest rates, making today's yields more attractive by comparison. This increase in demand pushes bond prices up and yields down, as bond prices and yields are inversely related. Sources: -             https://lnkd.in/e3DKGAP7 -             Bloomberg (2024) Us Generic Govt 2 Yr Index. [Accessed 05/09/2024] -             https://lnkd.in/eWfq7k-Z -             https://lnkd.in/e6H6uxZp -             https://lnkd.in/e2jgsq_r -             https://lnkd.in/ejsjV_kr.

Bond Markets Update: During the Jackson Hole conference, Fed Chair Powell finally announced the beginning of an interest rate cut cycle in the U.S. The key question remains how aggressively and quickly the Fed will be willing to lower rates. The extent of rate cuts will directly depend on U.S. economic data this fall. Currently, the primary scenario suggests a gradual economic slowdown without a clear crisis, although negative data has been gradually accumulating. This is particularly evident in the labor market, where we are seeing both deteriorating current data and a highly negative revision of statistics from the past year. Supporting the labor market remains a top priority for the Fed (along with the "not-so-sure" success in combating inflation). Furthermore, rate cuts are politically motivated given the rising interest expenses in the U.S. budget. Portfolio Update: YTD August, the EUR share class was up 5.5% and the USD up 7.0%. At the end of last month, we decided to temporarily reduce risk in the portfolio by replacing long-term bonds with 3-month T-Bills. The yield on 10-year US Treasuries was unable to break through the critical 3.8% level, and we decided to avoid taking on additional risk until this level is breached. Despite this, we maintain a positive outlook on long-term US government bonds and began increasing our position again in early September. In our view, the investment case for this segment of the market remains strong. We continue to believe that corporate bonds are unattractive and do not offer adequate risk compensation. #bondmarkets #interestrates #yileds #bonds #marketoutlook #portfoliomanagement

*The US Federal Reserve has cut interest rates by 0.25%* for the third consecutive time, lowering the federal funds target rate range to 4.25%-4.5% and reducing the reverse repo rate to 4.25% from 4.55%. This move comes despite concerns over inflation and the potential impact of Donald Trump's policy decisions. The Fed noted that economic activity has continued to expand at a solid pace, with labor market conditions easing and the unemployment rate remaining low, although inflation remains somewhat elevated. *In light of this development, markets have reacted negatively, with the DOW falling 1123 points, NASDAQ 716, and GIFT NIFTY trading at 23913(fall if 344 points at 8:47 a.m today)* NIFTY also experiencing significant declines. As a result, we can expect a highly volatile market today, and it's essential to exercise caution when trading.

Was this really a surprise for the public equity markets? It appears so, with a nearly 3% decline in the S&P 500 today and similar performance from the other major indexes. Hey, we did get a 25 bps cut. I understand, suggesting moving from four to two cuts in ‘25. Slight shock. But other signals from the bond & volatility markets told us otherwise well before this announcement. But the data has been relayed. The inflation story detailed out. Is this merely a hiccup??? What are your thoughts? Are private markets a partial solution for public markets volatility?? #interestrates #federalreserve #swaps #privatemarkets #familyoffice #lp #gp #publicmarkets