Fed's Make-or-Break Rate Decision to Shake Markets
All eyes are locked on the Federal Reserve's monetary policy decision this Wednesday, with the central bank's rate move promising to be a make-or-break moment for markets.
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The big question is whether the Fed will opt for a more hawkish 25 basis point "baby step" cut or a larger 50 basis point "shock and awe" strike. As of Friday, traders were essentially split down the middle on the odds.
Here's a quick look at what to watch for in this pivotal week:
- Monday: Kick off with Empire Manufacturing data
- Tuesday: Consumer check with August retail sales
- Wednesday:
- FOMC rate decision at 2pm ET (25 bps to 5.0%-5.25% or 50 bps to 4.75%-5.0%?)
- Updated economic projections and "dot plot" to signal future path
- Powell press conference at 2:30pm to explain rationale
- Thursday: Weekly jobless claims, existing home sales, key earnings
- Friday: Quiet end to huge week
No matter the Fed's decision on Wednesday, it will likely dictate the market's direction through year-end and into 2025. Policymakers are caught between stubbornly high inflation favoring a 25 basis point cut and deteriorating economic conditions arguing for a bigger 50 basis point blast.
A dovish tilt now also risks denting the Fed's credibility after projecting higher terminal rates previously. But any miscalculation could upend 2024's hard-fought recovery.
TL;DR - Circle Sept. 20 and buckle up! The Fed's decision could deliver a "Goldilocks" catalyst for new highs or completely derail markets. It's possibly the most crucial event for traders this year.
YOU NEED TO WATCH THIS TONIGHT
CNBC's 'Prophet' issues urgent Fed warning
In March 2022, the Federal Reserve raised interest rates for the first time in five years.
It triggered a brutal bear market that wiped out $9 trillion of American wealth... and slashed the average investor's portfolio nearly in half.
Now, according to the man whom CNBC nicknamed 'The Prophet'...
The Fed's next move is about to have a similar ripple effect on ordinary folks across America.
This event could dictate the next decade of every American's financial life, and it's critical that you take steps now to prepare.
Regards,
Kelly Brown
Senior Researcher, Stansberry Research
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