Summary
As expected, the Federal Reserve (Fed) cut the federal funds rate band by 25 basis points from 1.75%-2.00% to 1.50%-1.75%.
Changes in the text of the Federal Open Market Committee statement, as well as information provided in the press conference, indicate that the Fed believes it is done cutting interest rates unless economic conditions continue to soften.
The bond market, which had been pricing in a 25% chance of a cut in December, reduced the odds of another cut in 2019 to nearly zero. However, it increased the odds of additional cuts in 2020.
By James Ong, Director, Derivative Portfolio Management
As expected, the Federal Reserve (Fed) cut the federal funds rate band by 25 basis points from 1.75%-2.00% to 1.50%-1.75%.1 Changes in the text of the Federal Open Market Committee statement, as well as information provided in the press conference, indicate that the Fed believes it is done cutting interest rates unless economic conditions continue to soften. It has now cut interest rates three times this year, making this mini cutting cycle consistent with the shorter cutting cycles of 1996 and 1998. Fed Chairman Jerome Powell indicated that the threshold for the Fed to hike interest rates in the future is quite high.
Invesco Fixed Income believes the near-term path of the federal funds rate is likely to be dictated by the performance of economic data and progress on US-China trade talks. We believe the pace of economic growth in the US will continue to slow over the next several months, but it is not clear whether activity will slow quickly enough for the Fed to resume cutting. The Fed has not indicated how much economic activity will need to decline for it to begin easing again.
The bond market, which had been pricing in a 25% chance of a cut in December, reduced the odds of another cut in 2019 to nearly zero.2 However, it increased the odds of additional cuts in 2020.2 Risky markets such as equities performed well.3 The dollar softened against other currencies. We believe that longer-dated interest rates will begin to rise as the market prices in stronger global growth in the first half of 2020. We expect the dollar to continue to depreciate.
1 Source: Federal Reserve Bank, Oct. 31, 2019
2 Source: Bloomberg L.P., Oct. 31, 2019
3 Source: Bloomberg L.P., S&P 500 Index, Oct. 31, 2019
Important information
Blog header image: Hamid Ahang / EyeEm / Getty Images
A basis point is one hundredth of a percentage point.
The federal funds rate is the rate at which banks lend balances to each other overnight.
The Federal Open Market Committee (FOMC) is a 12-member committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
The opinions referenced above are those of the author as of Oct. 31, 2019. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.
Third Fed rate cut could be the last in 2019 by Invesco US
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Summary
As expected, the Federal Reserve (Fed) cut the federal funds rate band by 25 basis points from 1.75%-2.00% to 1.50%-1.75%.
正如预期的那样，美联储(Fed)将联邦基金利率区间从1.75%-2.00%下调25个基点，至1.50%-1.75%。
Changes in the text of the Federal Open Market Committee statement, as well as information provided in the press conference, indicate that the Fed believes it is done cutting interest rates unless economic conditions continue to soften.
联邦公开市场委员会(Federal Open Market Committee)声明文本的变化，以及新闻发布会上提供的信息表明，美联储认为，除非经济状况继续走软，否则它已经完成了降息。
The bond market, which had been pricing in a 25% chance of a cut in December, reduced the odds of another cut in 2019 to nearly zero. However, it increased the odds of additional cuts in 2020.
债券市场此前预计12月份降息的可能性为25%，将2019年再次降息的可能性降至几乎为零。然而，它增加了2020年进一步削减的可能性。
As expected, the Federal Reserve (Fed) cut the federal funds rate band by 25 basis points from 1.75%-2.00% to 1.50%-1.75%.1 Changes in the text of the Federal Open Market Committee statement, as well as information provided in the press conference, indicate that the Fed believes it is done cutting interest rates unless economic conditions continue to soften. It has now cut interest rates three times this year, making this mini cutting cycle consistent with the shorter cutting cycles of 1996 and 1998. Fed Chairman Jerome Powell indicated that the threshold for the Fed to hike interest rates in the future is quite high.
正如预期的那样，美联储(Fed)将联邦基金利率区间从1.75%-2.00%下调25个基点，至1.50%-1.75%。1联邦公开市场委员会(Federal Open Market Committee)声明文本的变化，以及新闻发布会上提供的信息表明，美联储认为，除非经济状况继续走软，否则它已经完成了降息。今年以来，美联储已经三次降息，使得这次小型降息周期与1996年和1998年较短的降息周期保持一致。美联储主席杰罗姆·鲍威尔表示，美联储未来加息的门槛相当高。
Invesco Fixed Income believes the near-term path of the federal funds rate is likely to be dictated by the performance of economic data and progress on US-China trade talks. We believe the pace of economic growth in the US will continue to slow over the next several months, but it is not clear whether activity will slow quickly enough for the Fed to resume cutting. The Fed has not indicated how much economic activity will need to decline for it to begin easing again.
景顺固定收益公司认为，联邦基金利率的近期走势可能取决于经济数据的表现和美中贸易谈判的进展。我们相信，未来几个月，美国经济增长的速度将继续放缓，但目前尚不清楚经济活动是否会放缓到足以让美联储恢复减支的程度。美联储并未表示需要减少多少经济活动，才能再次开始放松货币政策。
The bond market, which had been pricing in a 25% chance of a cut in December, reduced the odds of another cut in 2019 to nearly zero.2 However, it increased the odds of additional cuts in 2020.2 Risky markets such as equities performed well.3 The dollar softened against other currencies. We believe that longer-dated interest rates will begin to rise as the market prices in stronger global growth in the first half of 2020. We expect the dollar to continue to depreciate.
债券市场此前预计12月份降息的可能性为25%，将2019年再次降息的可能性降至几乎为零。2然而，它增加了2020年进一步削减的可能性。2股票等高风险市场表现良好。3美元对其他货币走软。我们相信，随着市场价格上涨，较长期利率将在2020年上半年开始上升，全球经济增长将更加强劲。我们预计美元将继续贬值。
1 Source: Federal Reserve Bank, Oct. 31, 2019
2 Source: Bloomberg L.P., Oct. 31, 2019
2来源：Bloomberg L.P.，2019年10月31日
3 Source: Bloomberg L.P., S&P 500 Index, Oct. 31, 2019
3来源：Bloomberg L.P.，标准普尔500指数，2019年10月31日
Blog header image: Hamid Ahang / EyeEm / Getty Images
博客标题图像：Hamid Ahang/EyeEm/Getty Images
A basis point is one hundredth of a percentage point.
The federal funds rate is the rate at which banks lend balances to each other overnight.
The Federal Open Market Committee (FOMC) is a 12-member committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.
联邦公开市场委员会(FOMC)是联邦储备委员会(Federal Reserve Board)的12名成员组成的委员会，定期开会制定货币政策，包括向银行收取的利率。
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
标准普尔500指数是一个非管理指数，被认为是美国股市的代表。
The opinions referenced above are those of the author as of Oct. 31, 2019. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.
以上引用的意见为作者截至2019年10月31日的意见。这些评论不应被解释为建议，而是更广泛主题的例证。前瞻性陈述不能保证未来的结果。它们涉及风险、不确定性和假设；不能保证实际结果与预期不会有实质性差异。
美联储第三次降息可能是Invesco US在2019年的最后一次降息
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
编者按：本文的摘要项目符号是通过寻找Alpha编辑来选择的。
