The legend in the InstaSpot team!
Legend! You think that's bombastic rhetoric? But how should we call a man, who became the first Asian to win the junior world chess championship at 18 and who became the first Indian Grandmaster at 19? That was the start of a hard path to the World Champion title for Viswanathan Anand, the man who became a part of history of chess forever. Now one more legend in the InstaSpot team!
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As the US Federal Reserve maintains a firm stance, investors are preparing for a year of minimal rate cuts. The federal funds rate, currently at 5.25–5.5%, reflects the strategic restraint of the Fed's monetary policy.
On the day when the Federal Reserve announced that it kept interest rates steady, the market reaction was mixed. Investors lowered their expectations of imminent rate cuts due to a resilient economy and still elevated inflation. In April, the S&P 500 index fell by more than 4%, reflecting growing investor concerns about inflation and expectations of high interest rates for an extended period.
Initially, market participants anticipated seven rate cuts in 2024. This view is supported by the latest forecasts from the CME FedWatch Tool, which indicates the likelihood of potential rate cuts occurring after the US election in November.
The challenge lies in the fact that the Federal Reserve is paying increasing attention to economic indicators – controlling inflation and maximizing employment. Unemployment is the primary concern for the Fed. Earlier, unemployment was very low, but in terms of inflation, it was far from the target. This underscores the Fed's strategic adaptation to changing economic indicators, mainly focusing on maintaining a stable level of employment.
The strength of the labor market continues to remain a promising signal despite other economic obstacles, Fed Chairman Jerome Powell noted at the last Fed meeting. Moreover, considering that the current unemployment rate remains at a historically low level of 3.6%, this reinforces the Fed's cautious approach as it seeks to carefully balance its dual mandates.
Regarding investments during such a period, it is recommended to adopt protective investment strategies to reduce the risk. The idea is to buy an asset that will provide reliable income, not fluctuate too much, and reduce the portfolio's beta.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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