Will it be 50 or 25? Either way it should be ok
Main U.S. indexes rally; Dow out front, up ~0.8%
All S&P 500 sectors green; Utilities, Materials lead
Dollar slips; crude ~flat; gold up ~1%; bitcoin up >2%
U.S. 10-Year Treasury yield dips to ~3.65%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
WILL IT BE 50 OR 25? EITHER WAY IT SHOULD BE OK
U.S. market watchers have been in a fluster about whether the Federal Reserve will cut rates by 50 basis points or 25 basis points after its Sept. 17-18 meeting.
Fluctuations in bets have been evident in the CME Group's FedWatch tool with traders last putting a 57% probability on a 25 basis point cut and a 43% probability on a 50 basis point cut.
It shows Thursday's probability was at 72% for 25 and 28% for 50. Earlier on Thursday though, after the producer price report and Wednesday's consumer inflation report, traders were betting for a while on a 85% chance of the Fed cutting interest rates by 25 bps, according to CME's FedWatch Tool.
While the changes indicate uncertainty, strategists say this doesn't necessarily mean that the market will panic after whatever decision the U.S. central bank makes next week.
"Next week they're going to be putting in a cut. The question is how much. The market seems to imply 25 and their language seems to imply 25. There's concern that if they do 50 there may be a misinterpretation that they need to hurry because of things being more difficult," said Jason Pride, chief of investment strategy and research at Glenmede in Philadelphia.
"The choice between 25 and 50 is probably not that big a deal because you're going to tie messaging around it," he said during a telephone interview.
So if the Fed goes with a 25 basis point cut, it will impact its signals on the number of future cuts. And if starts with the bigger cut it will explain its reasoning and temper expectations for future cuts accordingly, the strategist added.
"Their stopping point will be at the same point," he said.
Over at Wells Fargo Investment Institute, Sameer Samana, senior global market strategist had a similar message in emailed comments.
"It’s possible that 50bps leads to a 'the Fed’s worried/what do they see that we don’t see' reaction, but again it comes back to how it’s communicated at the presser and in the summary of economic projections," Samana said.
"I don’t see either sized cut leading to any type of major/multi-week sell-off," said Samana, although he noted that elections might be a bigger catalyst than the easing pace.
So he says: "Investors should position for easing financial conditions and an improving economy, while using election-related dips as an opportunity to add equity risk."
(Sinéad Carew)
*****
FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:
LONG-DATED BOND POSITIONS MOST CROWDED? NOT NECESSARILY - CLICK HERE
INDIVIDUAL INVESTOR BEARS PERK UP - AAII - CLICK HERE
FRIDAY DATA ROUNDUP: 13 IS A LUCKY NUMBER - CLICK HERE
WHAT A DIFFERENCE A WEEK CAN MAKE! - CLICK HERE
HAVE GRAINS REACHED FERTILE GROUND ON THE CHARTS? - CLICK HERE
THE MACRO OUTLOOK MARKET DIVIDE - CLICK HERE
IS THE ECB FALLING BEHIND THE CURVE? - CLICK HERE
WHY NOT 50? - CLICK HERE
STOXX 600 HEADS FOR WEEKLY GAIN - CLICK HERE
EUROPEAN FUTURES EDGE UP ON RATE CUT BETS - CLICK HERE
SUPER-SIZED FED CUT CLIMBS BACK ON THE TABLE - CLICK HERE
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.