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The US economy displays a blend of resilience and challenges. Although inflation appears to be managed, there is cautious optimism for continued growth in the market.
The labor market remains a critical concern. While the national unemployment rate ticked down to 4.2% in August 2024, the IT sector is experiencing a disproportionately high unemployment rate of 6%, reflecting significant disruptions due to advancements in AI and streamlining efforts. This divergence highlights the uneven impact of technological change across different sectors.
On September 18, 2024, the Federal Reserve implemented a bold half-point rate cut, reducing the federal funds target range to 4.75% to 5%. This move was driven by a combination of cooling inflation and a softening labour market, signalling the Fed’s intent to prevent the economy from tipping into recession. The decision reflects a recalibration of monetary policy aimed at sustaining economic growth while managing inflation, which has shown signs of abating.
The US economy continues to face a mix of challenges and opportunities as it adapts to higher interest rates, inflationary pressures, and shifting consumer behaviour. In recent months, Wall Street has been alarmed by rising delinquencies in credit card and auto loans, particularly affecting lower-income consumers, signaling potential economic stress.
The U.S. economy in 2024 is at a pivotal point. While inflation is under control, economic growth is decelerating, shifting the spotlight to the Federal Reserve’s decisions on cutting interest rates. The conclusion of the inverted yield curve could signal the onset of a recession.
The U.S. economy has been facing a challenging environment, characterized by slower job growth, persistent inflation, and fluctuating consumer spending.
Last week, Fed Chair Jerome Powell indicated he was getting more worried about a weakening job market than about inflation. He has recently signalled a shift in focus towards the labour market
Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole summit marked a significant shift in monetary policy. Learn how the market reacted to this policy.
In this month’s AlgoMerchant Market Outlook article, we will be sharing several valuable insights with our AlgoMerchant community members in the run up to the Federal Reserve’s first FOMC meeting of 2024 which is scheduled for next week, including:
1. Why were equities rallying in Q42023? Was this in response to the Fed’s dovishness, and what will the FOMC most likely do in its upcoming meeting?
2. How have fresh data on growth drivers, inflationary stubbornness, and robust jobs figures influenced the Fed’s perspective?
3. What are the key factors impacting the Fed’s decision-making in 2024? What uncertainties can play into this and how might global shipping impact the rate trajectory in 2024?
In this month’s AlgoMerchant Market Outlook article, we will be sharing several valuable insights with our AlgoMerchant community members through our round-up of key markets in 2023, as well as the economic outlook in the coming weeks and months, including:
1. How have equities, bonds and real estate faired in 2023? What happened to major commodities markets in gold and oil, and what have been the fundamental driving factors for their ups and downs; and what can we expect going into 2024?
2. What conclusions have the financial markets drawn from recent developments in Fed policy? How has this impacted investor behaviour?
3. What is the key source of risk to portfolios next year, even as monetary policy is expected to ease?
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