Is the Federal Reserve Planning a Surprise Interest Rate Cut Next Week?
According to FHN Financial, it’s unlikely that yesterday’s slight surprise on the inflation front will push the Federal Reserve to make any drastic moves on the interest-rate front next week. Traders are still placing the odds of a larger cut of 50 basis points at only 15%, as reported by the CME FedWatch tool. Despite this, some major Wall Street firms are sticking to their predictions for a significant rate cut next week, as stated by Will Compernolle, macro strategist at FHN Financial.
However, the Powell Fed is known for not surprising markets too much, especially close to the election and as the first cut of the cycle. The Fed is likely to avoid any flashy moves in order to maintain stability. In early morning trading, bond yields remained steady, with the 10-year Treasury rate at 3.65%, near the lows of the year, according to Dow Jones Market Data.
Analysis: It seems that the Federal Reserve may not be planning a surprise interest rate cut next week, despite some predictions from Wall Street. This could indicate a cautious approach by the Fed to avoid market volatility, especially in light of the upcoming election. Investors should keep an eye on bond yields for any signs of potential market shifts in the near future.