FED rate cut leaves bond market unchanged

Mon, 09/23/2024

by Ellie LeTu

Source: Financial Times

• Markets unchanged

  • Major stock indices and bond markets remained unchanged following the FED’s rate cut announcement.

  • S&P 500 ended 0.3% lower.

  • Bond markets ended just 0.02% lower.

• The 50bps cut were expected

  • The markets had already priced in a sizable 50 basis point cut.

  • The Fed had been laying the groundwork for weeks.

    • September’s underwhelming jobs report sealed the deal that the Fed needed more than a 25 bp cut.

  • Stark contrast with the volatility experienced in the markets recently.

• Looking ahead

  • Lower rates are generally a good thing for stock markets.

  • However, parts of the market may be worried that a severe economic downturn could take a hit on corporate profits.

  • The S&P 500 is up almost 18% this year, touching record highs last week.