Today the ECB will likely cut its official interest rates for the second time this year. Consensus points to another 25 bps cut, after the same reduction in the June meeting. Christine Lagarde will have a press conference afterwards and will provide more guidance on future moves, although it is expected this will be the last move for the ECB on 2024. In anticipation, european equity markets are rallying, while the U.S. are flat in early trading. This actions will likely put pressure on the Fed to act as well, and that’s what the 2 year U.S. treasury is reflecting as well as the US dollar index, which, as you can see in the chart below, has been trending down perhaps in anticipation of more agressive rate cuts after the initial one next week. The cycle has started and now the question will be the pace of the next moves.
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