Investors continue to fret over the possibility of a U.S. interest rate cut
The main US indexes are down over the last three days as investors continue to fret over the probability of an interest rate cut in July, as an element of doubt was introduced by better than expected U.S. job data announced last week.
Hyper
I can’t help but think that U.S. markets are so ‘hyper’ right now on talk of low interest rates and easy money again, that any hint of disappointment would cause stocks to do an abrupt about-turn.
Previous Fed decision
What will the Fed do this time? Remember Christmas 2018? The Fed on 19th. December 2018 put interest rates up again for the fourth time in 2018 and signalled two further rate increases to follow in 2019.
Markets dropped dramatically in a matter of days, only to recover again in early 2019 all the way through to today (July 2019) reversing all the loses and adding much more over the months. It was the worst December in the Dow’s history. Certainly the worst I can remember. And no Santa rally, infact quite the reverse!
The DOW fell around 4000 pts from its high on 3rd December to its low on Christmas eve 2018. And all because the U.S. markets wanted a rate cut – or preferred, at least, to not have another increase! All toys were thrown out of the pram as the markets had a hissy-fit!
Fed pivot
The Fed then did an about-turn, a 180 degree pivot in January after the adverse market reaction to the Fed’s interest rate decision and possibly from Trump pressure too.
And now? It’s no interest rate increases at all or maybe even a rate cut! Will that be 0.50 or 0.25 basis points please sir?
And remember, it was just seven months ago from today (July 2019), that U.S. interest rates were predicted to go up – with two more increases planned for 2019.
And the lesson is…
So, as for the decision this time – your guess is a good as mine? Don’t make any assumptions. Don’t guess! Just trade what happens, not what you think will.
Trade war truce and latest talks – new update due soon…?
Investors await trade war news updates after China and U.S. announced a tariff truce at the G20 meeting in June 2019.
This has introduced weakness on U.S. stock markets and has further infected European stocks. However, there were reports of communication between high level U.S. and China diplomats on Tuesday 9th. July 2019.