Rate Cut No-Show
Word out of the Federal Reserve… US interest rates remain motionless at 2.25%. The build-up of all the market noise in June has technically come to nothing, but the stock market’s taking it well.
It might not be a sugar rush to your stocks, but little harm is done to them either. Rate cuts are relied upon as the crutches to an unstable economy, making it cheaper to do business across America. For now, the market hums on without support from The Fed, but market gossip has gained momentum.
Despite agreeing in almost complete unison that rates shouldn’t move, Powell had more to reveal about Fed officials in a statement themed by “patience.” 9 of the 17 officials back cuts in 2020, stimulus apparently being “appropriate in the scenario they see as most likely.” A comment like this is a stimulus in itself, investors taking onboard greater expectations for valuable market events next year. Investors could run with this.
Continued trade tensions between the US and China may eventually tip rates over the edge. Fading growth has led to extended G-20 meetings being announced as world leaders attempt to hash out a deal. Fed officials will listen into those talks in the same way Trump said he listened in on policy news yesterday. Not a man he appointed, Trump wanted Powell under pressure to cut. A roaring stock market would serve as the ideal backdrop to his 2020 re-election campaign. He may well get one; the story is not over yet.