How a Fed Easing Cycle Could Impact Asset Returns: Insights from Capital Economics
The Federal Reserve is poised to make a decision on Interest rates, with expectations split between a 25 or 50 basis point cut. While Inflation data has shifted expectations towards the former, soft labor market data has increased bets for a deeper cut. Traders are currently pricing in a 51% chance for a 25 bps cut, and a 49% chance for a 50 bps cut. The decision next week is likely to signal the start of an easing cycle for the Fed, with at least 100 bps of cuts expected this year. Analysts believe that the Fed may not cut rates as deeply as anticipated, as they do not foresee a recession on the horizon. However, the performance of equities, the US dollar, and real gold prices during Fed easing cycles remains uncertain.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.