Bill Diviney, senior economist at ABN AMRO, expects a quicker pace of cuts than markets and consensus and suggests that they and the consensus is looking for a 25bp cut when the September FOMC meeting concludes today.
Key Quotes:
“Market pricing of rate cuts has declined somewhat over the past week, consistent with the broader move in bond markets surrounding last Thursday’s ECB meeting, however a 25bp cut is still around 90% priced in. Given this, the focus will naturally be on the quarterly projections and on Chair Powell’s press conference. Ultimately, we expect the Fed to deliver another two rate cuts by the end of the year after today’s cut, which is more aggressive than both consensus and markets – both of which expecting just one further cut this year. However, the difference is more about timing and pace, as both consensus and markets expect another cut next year, while we expect the Fed to pause.”
“The question for this week is, to what extent the Fed will immediately signal more easing? Given the high degree of uncertainty over the trade war and the rather mixed tone to macro data, the FOMC will likely be reluctant to pre-commit and to signal too much at this stage; we expect the median ‘dots’ to foresee no further cuts this year, with one or two cuts next year.”
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.