Analysts at Rabobank expects the US Fed to cut the Fed funds rate by 25bp again and suggests that they may also indicate that they think the mid-cycle adjustment has come to an end.
Key Quotes
“How will ebullient markets react to being told that all is going so well that it’s not necessary to keep cutting rates? ‘Luckily’, however, we still expect a US recession in 2020 that will force the Fed to cut rates all the way to zero before the end of next year. That will be an interesting backdrop for an election year when we already have Washington DC at fever-pitch.”
“Clearly, markets should be pricing for nothing much to change for the worse ahead(!) In just the same way, for example, that the US House of Representatives has just overwhelmingly (405-11) supported a resolution to: (1) recognise the Armenian Genocide on Turkey’s 96th birthday; and (2) to advance a bill to place sweeping sanctions on Ankara, and to provide a detailed account of President Erdogan and his family’s net worth and income. These are officially two NATO allies by the way, and the first and second largest militaries within it. Never mind all that though, eh Mr Market?”
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