Summary
- The Federal Reserve is likely to cut rates by 25 bps at the September FOMC meeting, despite the need to cut by 50 bps to prevent a recession.
- The Fed is limited in cutting interest rates more aggressively due to a borderline high level of 10Y breakeven inflation expectations.
- Thus, the stock market is likely facing a recession and a recessionary bear market with a bubble burst, given the current valuations.
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The September FOMC Meeting
The Federal Open Market Committee is meeting on September 16-17, and it’s widely expected that it will lower the Federal Funds rate by 25 bps, and resume the monetary policy easing cycle after
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