Standard Chartered warns against a 50-basis point FOMC rate cut

seekingalpha09-16

Standard Chartered came out on Monday and argued that an FOMC rate cut of 50-basis points may perhaps be worse than cutting rates by the smaller 25-basis points in the upcoming Wednesday FOMC meeting....

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Standard Chartered went on to add: “Cutting by 50bps and being wrong would likely be worse than cutting by 25bps and being wrong.” The British multinational bank highlighted that Jerome Powell and the Fed cannot afford to disappoint markets. The firm sees a bigger risk in cutting rates by 50-basis points, as there then stems the possibility of watching September unemployment tick up. 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Standard Chartered went on to add: “Cutting by 50bps and being wrong would likely be worse than cutting by 25bps and being wrong.” The British multinational bank highlighted that Jerome Powell and the Fed cannot afford to disappoint markets. The firm sees a bigger risk in cutting rates by 50-basis points, as there then stems the possibility of watching September unemployment tick up. The firm said, then what? Standard Chartered believes that a 25-basis point cut can be effective with an attached clear message “that the FOMC will be on the lookout for conditions that justify a 50bps cut.” According to the FedWatch Tool on Monday, the target rate probability for a 50-basis point rate cut on Wednesday sits at 65% while a 25-basis point cut stands at 35%. For market participants closely monitoring the moves in rates, they may also want to look at Treasuries and bonds, as these instruments are directly affected by the underlying stance of interest rates. See some popular listed fixed income funds below: Treasury ETFs: (TLT), (TLH), (IEF), (IEI), (SHY), (SGOV), (SCHO), and (BIL). Bond ETFs: (NYSEARCA:AGG), (NASDAQ:BND), (VCIT), (MUB), (MBB), (JNK), (LQD), (HYG), and (TIP). Furthermore, as of Monday, the shorter end U.S. 2-Year Treasury yield (US2Y) is lower by 3 basis points to 3.55% while the longer end U.S. 10-Year Treasury yield (US10Y) is down by 1 basis point to 3.64%. See how other yields trade across the entire yield curve here.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"Economic Data","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2467481031"}