Cuts Around the Corner
- The US economy grew at 2.8% annualized rate in the second quarter, in a sign of continued consumer resilience as the Federal Reserve considers cutting interest rates in the coming months. Despite the strong GDP performance, jobs figures from this month suggest the labor market is softening, bolstering the case for an imminent rate cut. The Fed maintains that there is still a path to a “soft landing”, where inflation comes back down to target without triggering a surge in job losses.– FT
- Federal Reserve officials hinted they were moving closer to lowering interest rates when they agreed to hold them steady on Wednesday, July 31st. “A reduction in the policy rate could be on the table as soon as the next meeting in September,” said Fed Chair Jerome Powell at a news conference after the meeting. “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point.” – WSJ
- Over the course of 2023 and the first half of 2024, equity markets have risen steadily, driven by positive economic and earnings news, a technology boom driven by AI-related firms, and expectations of the U.S. Federal Reserve (Fed) cutting rates at some point in the near future. One consequence of such a strong rally is that the equity risk premium, the expected excess return that compensates an investor for the risk of investing in equities, hasn’t been this unfavorable since 2001. In short, credit may offer competitive relative value in the current environment. – Oaktree
Information in this commentary is gleaned from third-party sources, and while believed to be reliable, is not independently verified. This content is not intended to be tax, legal, investment, or fiduciary advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Bernardo Wealth Planning recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. Past performance does not guarantee future results.