Which asset would you choose after Fed's 50bps rate cut?
Yesterday, after Fed announced a 50bps rate cut, US stocks experienced a roller-coaster ride.
Powell’s speech suggests that the 25bps intended for July could be included in the September cut. However, Powell also expressed a hawkish stance, indicating that the Fed won’t continue cutting rates at this pace.
50 bps rate cut is a significant catalyst for the market.
The most likely beneficiaries of the rate cut are U.S. Treasury bonds and small-cap growth stocks. B
U.S. Treasury prices have a predictable upward trajectory. However, $iShares 20+ Year Treasury Bond ETF(TLT)$ closed at $99 yesterday, presenting a good buying opportunity.
Moreover, lower borrowing costs for small and medium-sized companies will improve their profitability. As a result, $iShares Russell 2000 ETF(IWM)$ and $ARK Innovation ETF(ARKK)$, which invests in growth stocks, will also benefit from the rate cut.
Some investors also suggest that undervalued Hong Kong stocks could gain as well. Prior to the Fed’s rate cut announcement, Hong Kong stocks had already risen for four consecutive weeks in August. After the Fed's announcement, $HSI(HSI)$ increased by 2.00%, returning to the 18,000-point level.
The Fed’s 50bps rate cut has opened the door for a slow, long-term bull market in precious metals. $Gold - main 2412(GCmain)$ rose 1% today, reaching $2,610.5 per ounce.
Which asset will benefit the most from the Fed's 50bps rate cut?
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