Summer doldrums are here, but no loss of excitement in the markets. The Fed has followed through in its most telegraphed move ever to cut interest rate. A cut of 25bps was almost a certainty as the Jul 31st decision date came close.
However, it seems like Chairman Powell may have shown his hand a bit more than expected. Trump has been calling for further cuts and announced more tariffs on Chinese goods. This increased the bond market’s pricing odds of another cut in Aug/Sep. While the stock market is cheering on, history has shown that rate cuts are seldom bullish for the economy and markets. It remains to be seen how things play out in the coming weeks/months.Continue reading