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Fed Faces New Economic Landscape Post-Trump Victory

  The U.S. Federal Reserve is poised to reduce its benchmark policy rate by a quarter of a percentage point at the conclusion of its policy meeting on Thursday. This decision, while significant, is overshadowed by the broader economic uncertainties following Donald Trump’s re-election. Trump’s victory introduces potential shifts in economic policies, including changes to tariffs, tax cuts, and immigration, which could significantly impact the Fed’s approach to managing economic growth and inflation. The central bank, which has been focused on combating inflation, may now need to navigate a more complex economic environment with higher federal deficits and potential inflationary pressures. Market reactions have already been notable, with bond yields rising as investors anticipate a less aggressive rate-cutting cycle from the Fed. The central bank’s challenge will be to balance these new fiscal policies while maintaining its dual mandate of low inflation and low unemployment. As the Fed

Markets Update: Weekly recap, August 26, 2023

 


This week, the stock market has been in the news for a variety of reasons. The Federal Reserve’s annual Jackson Hole symposium was held, and it offered policymakers an opportunity to outline broad policy shifts. The Fed’s tone is gradually evolving in a more favorable way for both equities and bonds, but some uncertainty remains around what will be needed to fight the last mile of inflation. Growth has stayed more resilient than most expected (including the Fed), though some downside remains as the rate hikes filter through the economy. Policy rates are now at, or nearing, a peak.

The S&P 500 edged 1.4% lower this week, while the tech-heavy Nasdaq closed out the week down 1.9% . The Dow Jones Industrial Average (DJI) slid 1.1% or 373.56 points to close at 34,099.42 . All three major indexes ended firmly in the red. Investors remained nervous about what to expect from Fed Chair Jerome Powell’s Jackson Hole speech . The fear-gauge CBOE Volatility Index (VIX) was up 7.6% at 17.20.








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