ECB Rate Hike in Focus as Oil Tops $100 
Asian Currencies Steady as Yen Holds Firm, Oil Tops $100 
US Bans Canadian Alcohol, Motorcycles as Trade War Escalates 
China Buys 1 Million Tons of U.S. Soybeans Ahead of Xi Visit 
Oil Prices Hold Near Highs as U.S.-Iran Conflict Escalates 
UK Food Inflation Forecast to Hit 6.4% by Mid-2027 
Gold Prices Rise as Yen Rally Weakens Dollar 
Japan GDP Growth Beats Forecast, Boosting BOJ Rate Hike Bets 
Hormuz Shipping Slows as Iran Threats Lift Oil Risks 
Fitch Eyes Japan Budget for Fiscal Discipline 
German Inflation Accelerates to 2.9% in August 
Iran Threatens Gulf Energy Assets as U.S. Tensions Escalate 
US Stock Futures Mixed as Fed Rate Hike Bets Rise 
U.S. Stock Futures Steady as Oil Tops $100 Ahead of Inflation Data 
China Inflation Accelerates in August as CPI, PPI Rise 
China Exports Surge 25% in August as Trade Surplus Hits $119 Billion 
Asian Stocks Mixed as Korean Chipmakers Rally 
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Wells Fargo analysts believe that the recent rate cut by the Federal Reserve is the beginning of multiple reductions aimed at fueling market growth opportunities in 2025. The bank advises focusing on the long-term trajectory of rates, not the size of individual cuts.
Last week’s 50 basis point (bps) rate cut caught some investors off guard, though the fed funds futures market had priced in a 58% chance. “The important concept to latch onto over the past two months was not the ultimate size of the first cut but that the September policy meeting represented the first in what is likely to be a series of Fed rate reductions expected to last well into next year,” wrote Wells Fargo analysts.
Economic Support and Labor Market Growth
The bank anticipates that the expected series of rate reductions will support economic growth and labor markets. Federal Reserve Bank of Chicago President Austan Goolsbee supported this view, suggesting that further rate cuts will likely be needed to bolster the economy.
Wells Fargo projects that the Fed will reduce rates by 25 bps at both of the remaining Federal Open Market Committee (FOMC) meetings in 2024, totaling 100 bps of cuts by year-end. However, the bank notes that the timing of potential rate cuts in 2025 is still uncertain.
No Recession Anticipated, Moderate Slowdown Expected
While Wells Fargo expects a slowdown in the U.S. economy toward the end of 2024, they do not predict a recession. Instead, the bank foresees a moderate economic slowdown, followed by a positive impact from rate cuts. By the first and second quarters of 2025, Wells Fargo expects the domestic economy to benefit from the easing cycle, which could also enhance S&P 500 earnings, as about 35% of the index’s revenues come from international markets.
"Last week’s Fed rate cut is just the beginning in what is likely to be a series of rate reductions that should help spark broader opportunities next year,” the bank concludes.
