Why would the FED lower rates on Wednesday? My view is they will adopt a wait and see position for the following reasons:
- Relations tensions between China and US have cooled off
- The BREXIT might get a pause to be postponed after October 31st based on the UK law passed last week
- Inflation is starting to show signs of possibly coming back slowly
- The rate cut last july was, according to Powell's press conference on July 31st, “a midcycle adjustment to policy.” and not
"the beginning—for example, the beginning of a lengthy cutting cycle."
- The markets are ATH or close to
- US has near full employment
- Europe' Central Bank just announced incentives that will need time to show their effectiveness
- The last one is very subjective and they would never admit to it but... if I was the FED wouldn't I want to show my indifference and independence towards the bullying and bashing of the... I think you call him... President!?
Don't get me wrong, the risks of the Global economy are still VERY much present but several factors have been encouraging. Therefore, they will monitor the situation and continue to be "Data driven".
The problem is, for GOD knows what reason, the markets have priced a 25bp reduction. The reaction to this wait and see attitude from the FED will trigger a major SELL OFF!
After this week, lets see what October truly brings in terms of :
- Trade negotiations
- BREXIT
- Earning season
- EU possible trade issues because of Iran
- Economical data
- ...
So Wednesday and Thursday could turn out to be a major turning point for the bull market but there are also plenty of risks that can materialize later in order to make a bad situation even worse!
Trade safely!
Disclaimer:
The above are only my opinions and are not trading advises.
- Relations tensions between China and US have cooled off
- The BREXIT might get a pause to be postponed after October 31st based on the UK law passed last week
- Inflation is starting to show signs of possibly coming back slowly
- The rate cut last july was, according to Powell's press conference on July 31st, “a midcycle adjustment to policy.” and not
"the beginning—for example, the beginning of a lengthy cutting cycle."
- The markets are ATH or close to
- US has near full employment
- Europe' Central Bank just announced incentives that will need time to show their effectiveness
- The last one is very subjective and they would never admit to it but... if I was the FED wouldn't I want to show my indifference and independence towards the bullying and bashing of the... I think you call him... President!?
Don't get me wrong, the risks of the Global economy are still VERY much present but several factors have been encouraging. Therefore, they will monitor the situation and continue to be "Data driven".
The problem is, for GOD knows what reason, the markets have priced a 25bp reduction. The reaction to this wait and see attitude from the FED will trigger a major SELL OFF!
After this week, lets see what October truly brings in terms of :
- Trade negotiations
- BREXIT
- Earning season
- EU possible trade issues because of Iran
- Economical data
- ...
So Wednesday and Thursday could turn out to be a major turning point for the bull market but there are also plenty of risks that can materialize later in order to make a bad situation even worse!
Trade safely!
Disclaimer:
The above are only my opinions and are not trading advises.
Comment:
Is today the day? ... we shall see...
