Its official – The ‘Summer of Rate Cuts’ is here and it will dominate every narrative of the global economy throughout the remainder of 2024.
To quote analysts at GSC Commodity Intelligence – “Interest rate cuts are back on the agenda and are firmly positioned to be one of the most lucrative macro trading opportunities of the current financial climate that we find ourselves in right now”.
And guess what? This week is about one thing and one thing only: It’s all about the macroeconomics with trader’s attention firmly focused on the U.S Federal Reserve.
Last week, a normal day for markets became something extraordinary after the European Central Bank cut interest rates and in the process reversed a 25-year precedent. Since its founding in 1999 – the ECB has never cut interest rates before the U.S Federal Reserve.
The ECB’s break away from its long-standing tradition of historically being the last to move to the first – could potentially mark the beginning of a ‘new era’ for macro traders.
Let’s not underplay it. The ECB caught many by surprise, especially because recent data shows that inflation is still running hotter in the European economy – compared to the U.S and many other G7 countries. That in itself, chips away at any logical justification for the ECB to cut rates first.
Looking ahead, the big question now is: Will the Federal Reserve be next to cut interest rates in 2024?
The answer to that question may come from the hotly anticipated FOMC Monetary Policy Meeting on June 11-12, which will be followed by a press conference chaired by Fed Chair Jerome Powell.
As always, traders will be scrutinizing every word from Jerome Powell for fresh clues into the central banks future monetary policy plans and most importantly, confirmation of when the first rate cut will come.
While FOMC officials are widely expected to hold interest rates steady again this month – the latest “dot plot” will give insight into the U.S central bank’s longer-term outlook.
The Fed’s dot plot – formally called the Summary of Economic Projections — is a survey of officials, which captures their expectations for where interest rates, inflation and growth will be in the coming years. The last survey from March, showed the median Fed voter was still forecasting three interest rate cuts this year – which notably, was before inflation started accelerating again.
Regardless of the outcome, the Fed’s next rate decision is guaranteed to move the markets significantly, bringing with it massive opportunities to capitalize on!
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
