In the latest Take 5, Sonu Varghese, VP, Global Macro Strategist, breaks down the Fed’s first rate cut after a nine-month pause, why the labor market is driving policy decisions, and what investors should expect next. From shaky jobs data to fiscal stimulus on the horizon, this episode explores why the path of rates matters for growth, inflation, and the stock market.
Key Takeaways
- Fed Resumes Cutting: After nine months on hold, the Fed reduced rates by 0.25% to ~4.1%.
- Labor Market Weakness: Slowing payroll growth and a 4.3% unemployment rate drove the decision.
- More Cuts Ahead: Fed projects at least two more cuts in 2025 and one in 2026.
- Market vs. Fed: The markets are pricing in deeper cuts, influenced by potential Trump administration appointments.
- Bullish Setup: Lower rates plus fiscal stimulus could drive growth, profits, and stocks higher despite inflation risks.
