Market Analysis: The Fed may disappoint extremely dovish investors

Odaily Odaily News Investors are betting that the Federal Reserve will cut interest rates sharply this week, but they are likely to be disappointed because the performance of the US economy is not worth the aggressive rate cut at all. According to CME's Fed Watch tool, current US interest rate futures prices show a 65% chance of a 50 basis point rate cut and a possible 116 basis point rate cut this year. However, a series of economic data on Tuesday prompted the Atlanta Fed to raise its forecast for US GDP growth in the third quarter from 2.6% to 3.0%, indicating that the economy is not that bad. After weighing all factors, the Fed may cut interest rates by 25 basis points, and Powell may reiterate data dependence. The Fed's dot plot is unlikely to confirm the current pricing of aggressive and rapid rate cuts, but instead show a more restrained pace of rate cuts. This may be interpreted as a "hawkish rate cut", forcing investors who have hastily bet on a sharp rate cut to cover their positions. (Jinshi)