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Well, the big day came and went — and now we’re left to digest the Fed’s decision. As around half the market expected, we got a 50 basis point rate cut.
Now I’ve got a few thoughts on this move that I want to break down for you.
To start, as you probably know if you've been following me for a while, I don’t think the Fed should’ve cut rates at all. There’s still too much inflation— even by the Fed’s own target rate of 2% — and while the market might want rates closer to zero, I don’t see us getting back to that level.
Inflation has been rising steadily for years — and even though it’s slowed a bit, prices certainly aren’t dropping. Go to the grocery store or try to buy a car, and you’ll see prices still sitting sky-high.
The Market Reaction
Now, what’s really interesting is how the market reacted.
Gold, for example, saw some wild swings. When the rate cut news hit, gold shot up to around $2,627, then tanked down to $2,570 before bouncing right back to $2,610. It was like hitting the reset button.
That kind of volatility is why I always stress the importance of staying nimble — markets love to shake things up after big news like this.
And here’s something that doesn’t quite add up. Bond prices actually fell after the rate cut, which typically would mean interest rates are going up, not down.
It’s a bit of a head-scratcher, but it tells me that despite what the Fed is doing, the market isn’t entirely on board with their strategy.
So where do we go from here?
Well, in the short term, it’s looking like the markets are holding up pretty well. We saw the S&P futures touch new highs, and if they can push above 5,781 after tomorrow's contract rollover, we could see another leg higher.
But make no mistake — this isn’t the time to get complacent.
The Fed’s decision may have calmed some nerves, but inflation and other economic pressures are still very much in play.
Stay sharp, and let’s see how this unfolds over the next few days.
— Geof Smith
P.S. We haven’t a surge in nuclear this strong in ages… And there’s one clear way to play it that I’m sharing here. | | | | |
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