Fed cut to spark bull run says deVere CEO
WASHINGTON, 2 hours, 30 minutes ago
The US central bank - Federal Reserve - cut its key interest rate by 0.25 percentage points yesterday, the first cut this year.
Following the decision, Fed Chair Jerome Powell said: "the balance of risks has shifted" toward the employment side of the Fed's mandate, where as the risks had previously been tilted toward inflation.
The rate cut puts the target range for its main lending rate at 4% - 4.25%, said a Reuters report.
Commenting on the decision, deVere Group, the global financial advisory giant, said the Federal Reserve’s latest move is a watershed for markets, setting off what its CEO Nigel Green calls “the opening stage of a potential worldwide bull run.”
“The Fed has fired the starting gun,” says Green. “A quarter-point cut, a clear plan for two more this year, and an explicit focus on employment over inflation combine to deliver the most powerful signal we’ve seen in more than a year. Global investors will be acting now, not waiting.”
The Dow Jones Industrial Average immediately surged more than 400 points after the announcement, Treasury yields fell and markets priced in deeper easing.
“This is the Fed telling the world it will prioritise jobs and growth,” Green continued. "Markets understand the implications: cheaper money, a softer dollar, and an extended expansion. We’re going to be seeing decisive positioning across portfolios.”
He notes that US consumer prices are still running at 2.9% year-on-year, yet job creation has slowed to just 22,000 and unemployment claims have climbed to multi-year highs.
“Policymakers can tolerate a little extra inflation,” he says, “but they’ll not risk a hard landing. This is why the Dow jumped 400 points within hours and why capital is flowing into risk assets globally.”
“Tech and infrastructure plays are regaining momentum as financing costs drop,” Green explained. “We’re also seeing expanded allocations to Bitcoin and other digital assets as real rates fall and liquidity rises. These are not tentative moves, capital is shifting now.”
Green underscores that politics will reinforce the momentum. “President Trump wants strong growth heading into the mid-terms, and the Fed is now aligned with that objective. Fiscal and monetary policy are pulling in the same direction to sustain expansion.”
While upcoming jobs and inflation data will inject bouts of volatility, he believes the direction is set.
“Every release will either confirm the Fed’s hand or accelerate it. Those holding back for perfect clarity will pay a premium to catch up.”
He concluded: “The era of restrictive policy is ending. The Dow’s 400-point surge is likely to be only the beginning. Investors we advise across the world are positioning for what could be a sustained rally because this is the decisive shift – and guidance – they’ve been waiting for in many cases.” - TradeArabia News Service
