The Fed is close to cutting rates.
Trade disputes continue to cast a shadow over the US economic outlook. While recent data suggest some upside risk to our Q2 GDP forecast, business surveys point to a slowing economy. The Fed is getting ready to cut rates; we expect two 25bp reductions in the federal funds rate, with July and September now the most likely dates. There is considerable event risk around these projections – including the upcoming meeting between the US and Chinese Presidents. Risks still appear slanted towards the Fed making more rather than fewer cuts.
Find out more in the US Economic Update – June 2019
After what has been a solid month for equities and bond investors, month end flows have probably play their part in the price action overnight, US equities have lost momentum, UST have led a rise in core global bond yields and the USD is stronger. US and European inflation releases favoured the notion the Fed and ECB are done with their respective tightening cycles.
Bond markets have been supported by some market-friendly data and while Fed speakers were again mixed, it was the more dovish remarks that captured attention.
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.
