Wall Street Giants Scale Back Fed Rate Cut Forecast Amid ‘Remarkably Strong’ Job Market

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As a seasoned researcher with over two decades of experience in the financial industry, I’ve seen economic cycles come and go. The recent developments in the global economy have been nothing short of intriguing. On one hand, we have Wall Street giants like JPMorgan Chase and Bank of America scaling back their forecasts for a Federal Reserve interest rate cut, citing a robust labor market that indicates the U.S. economy remains resilient. This shift in predictions, from anticipating a substantial cut to a mere quarter-point reduction, is indeed surprising but not entirely unexpected given the current economic climate.

Two significant financial institutions on Wall Street, JPMorgan Chase and Bank of America, have adjusted their predictions about a potential Federal Reserve interest rate reduction in November. They attribute this change to a strong job market, which indicates that the American economy continues to show strength and durability.

Economists at two financial institutions recently changed their outlook, suggesting that the Federal Reserve might lower interest rates slightly (a quarter-point) during its next meeting instead of making a larger reduction as previously expected. This change in prediction is due to the Fed considering a less severe economic slowdown compared to earlier assumptions.

The adjustment in the predictions is made following the release of Friday’s employment report, which indicated a more robust labor market than anticipated. Michael Feroli, the chief U.S. economist at JPMorgan, and Aditya Bhave, an economist at Bank of America, cited this data as a crucial element in their reevaluation, as reported by Bloomberg.

According to Feroli, the robust job market simplifies the Federal Reserve’s mission of gradually adjusting interest rates, pointing out that a substantial weakening of economic circumstances is needed for the central bank to contemplate a more assertive policy of loosening.

Bhave agreed with Feroli’s viewpoint, noting that the latest economic data was exceptionally robust, implying a 0.5 percentage point interest rate decrease wasn’t needed. Furthermore, he conveyed positive expectations for upcoming economic expansion, pointing to indicators showing an uptick in productivity.

For the very first time ever, the combined wealth of money circulating in the United States, the Eurozone, Japan, and China has soared to an astounding $89.7 trillion, with a staggering increase of $7.3 trillion within just the last year.

Since February, the M2 money supply – encompassing cash in circulation, savings accounts, time deposits, and money market funds – has consistently expanded each month.

As a researcher, I’ve observed an escalating trend in the growth of the money supply that seems to have fueled a significant increase in the value of various assets, among them gold. This precious metal has nearly reached the $2,700 mark, with the upward trajectory gaining momentum following the Iranian retaliatory attack involving approximately 180 ballistic missiles launched towards Israel. According to the Iranian Revolutionary Guard Corps, this action was in response to the assassinations of Hamas’s political leader and an Iranian commander.

Significantly, Societe Generale has moved all its commodity investments into gold, primarily due to growing geopolitical concerns and a softening overall commodities market.

The French bank boosted its gold reserves to make up 7% of its overall investment portfolio, representing a significant 40% surge compared to the previous quarter. This shift towards gold indicates a rising trust in gold as a secure investment option during periods of market turmoil and uncertainty worldwide.

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2024-10-05 08:05