The prevailing expectation in the financial market is that the Fed will make a new cut in interest rates (the market has priced in a high probability of a reduction of 0.25 p.p.), as part of a monetary easing cycle after a period of tightening. Risk Rally: The expectation of lower interest rates tends to be seen as positive for risk assets, such as stocks. Wall Street (S&P 500, Dow Jones, Nasdaq) usually reacts with optimism, hoping for a "Christmas Rally." Motivation: Lower interest rates reduce borrowing costs for businesses and consumers, stimulating the economy, increasing liquidity, and making investment in debt securities ( such as Treasuries ) less attractive compared to stocks.
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🇺🇸 Expectation for the American Market
The prevailing expectation in the financial market is that the Fed will make a new cut in interest rates (the market has priced in a high probability of a reduction of 0.25 p.p.), as part of a monetary easing cycle after a period of tightening.
Risk Rally: The expectation of lower interest rates tends to be seen as positive for risk assets, such as stocks. Wall Street (S&P 500, Dow Jones, Nasdaq) usually reacts with optimism, hoping for a "Christmas Rally."
Motivation: Lower interest rates reduce borrowing costs for businesses and consumers, stimulating the economy, increasing liquidity, and making investment in debt securities ( such as Treasuries ) less attractive compared to stocks.