Market Comment | Fed delivers a ‘mid-cycle’ rate cut

Summary

Fed’s post policy statement fueled uncertainty over future interest rate trajectory, leading markets to trim future rate cut expectations. Meanwhile, today’s weak US ISM figures alongside Fed’s decision to end its quantitative tightening ahead of schedule dragged down bond yields.

Key points

• Key points:
• The Fed delivered a 25 bps interest rate cut, as widely expected, but slightly disappointed markets’ expectations of a more dovish stance.
• The UST 10Y yield fell below 2%, dragged by weaker-than-expected ISM figures, while the 10Y German Bund yield continues to hit historical lows.
• The USD strengthened further across the board.
• U.S. stock markets have recouped their losses today amid strong corporate earnings with tech companies leading the gains.

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