#97 Newsletter

Market Watch

Market Commentary

Fed Goes for 50

Federal Reserve, in its latest September 2024 policy meeting, the Federal Open Market Committee (FOMC) cut its benchmark policy rate by 50bps to bring the Fed Funds rate to 4.75-5% and revealed key updates to its economic projections, including anticipated rate cuts. The committee signaled that we could see another 50 basis points of cuts in 2024 and up to 100 basis points in 2025. Alongside these revisions, the FOMC also adjusted expectations for growth, inflation, and unemployment, all of which hold important implications for investors.

Growth Projection Marginally Lower for Q4 2024

The FOMC has revised its growth outlook for the final quarter of 2024 slightly downward. This adjustment reflects the economic challenges ahead, signaling a slower recovery. Investors should prepare for more conservative growth in certain sectors as the economy recalibrates.

Inflation: Slowing, But Still a Concern

Inflation projections for both 2024 and 2025 have been brought down slightly by the FOMC, which indicates progress but not a resolution. While Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) inflation metrics are slowly heading toward the 2% target, volatility in the market remains. Investors need to stay cautious as inflation continues to shape market dynamics.

Unemployment Rate: Projections Rise

The FOMC also revised its unemployment forecast upward, pointing to a cooling labor market. Rising unemployment could impact consumer spending, a key driver of economic growth. Investors should keep a close watch on sectors reliant on strong employment figures, as these may face challenges in the months ahead.

Rate Cuts: A Welcome Relief for Investors

Perhaps the biggest takeaway is the potential for rate cuts. The Dot Plot indicates that 2024 could bring another 50 basis points of cuts, with an additional 100 basis points in 2025. For investors, this means borrowing costs could ease, potentially providing a boost to both businesses and portfolios in the long run.

What Should Investors Do?

With changes in growth, inflation, unemployment, and potential rate cuts on the horizon, it’s critical to have a well-structured investment strategy. At Daulat Wealth Management, we can help you navigate this environment and ensure your portfolio is positioned to benefit from these evolving conditions.

Media Appearances

Interesting articles from the week