As the Federal Open Market Committee (FOMC) meeting approaches on September 18, the Federal Reserve has made it clear that there will be no emergency rate cuts. This decision is aimed at ensuring that the upcoming rate cuts are seen as a measure to maintain a soft landing and support job growth, according to OCBC senior FX strategist Philip Wee.
Positive Outlook Despite Recent Sell-Offs
Despite recent sell-offs in the market, including in US equities, the futures market is predicting a positive opening for the US today. The DXY Index experienced a sell-off down to 102.2 before rebounding to 102.7 by the end of the session, close to the previous closing level. The US Treasury 10Y yield also saw a dip to 3.66% before recovering to 3.79%, with bond sellers stepping in below 3.68%.
San Francisco Fed President Mary Daly believes that the market’s reaction to the weaker-than-expected jobs report last Friday was an overreaction, leading to fears of a US recession. Daly asserts that the current monetary policy is working as intended to lower inflation by cooling down the economy and labor market.
Better-Than-Expected US ISM Services Survey
The positive news from the US ISM Services Survey has helped alleviate concerns about economic growth. The overall Purchasing Managers’ Index (PMI) improved to 51.4 in July, surpassing expectations for a rise to 51.0 from 48.8 in June. Additionally, the ISM employment index strengthened to 51.1 from 46.1, while the prices index increased to 57.0 from 56.3.
Analysis: What This Means for You
Despite initial market uncertainties, the Federal Reserve’s decision to hold off on emergency rate cuts indicates a sense of confidence in the economy. The positive outlook from the US ISM Services Survey further supports this sentiment, suggesting that the economy is on a stable path.
For investors, this news could mean a more stable market environment in the coming weeks. It is essential to stay informed about the Federal Reserve’s decisions and economic indicators to make informed investment choices.