BofA: We look to fade any hawkish knee-jerk FOM reactions
BofA advises against reacting to any initial hawkish market responses following the September FOMC meeting. They anticipate a 25bps rate cut and expect the Fed’s dot plot to exceed market expectations, but expect Powell’s tone to remain dovish.Key Points:Market Uncertainty:High Uncertainty: The market is highly uncertain about the September FOMC meeting, reflecting varied expectations.Rate Cut and Dot Plot Expectations:Anticipated Cut: BofA expects the FOMC to announce a 25bps rate cut.Dot Plot: They predict the Fed’s dot plot will be above market expectations, potentially signaling a more cautious approach to future rate cuts.Powell’s Likely Tone:Dovish Outlook: BofA expects Fed Chair Powell to adopt a dovish tone, emphasizing downside risks to the labor market and expressing willingness to accelerate rate cuts if necessary.Conclusion:BofA suggests that any initial hawkish reaction to the September FOMC should be faded. They anticipate that Powell’s statements will lead to a market interpretation of the FOMC as delivering a neutral to dovish cut, despite any initial market movements.For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here. This article was written by Adam Button at www.forexlive.com.
BofA advises against reacting to any initial hawkish market responses following the September FOMC meeting. They anticipate a 25bps rate cut and expect the Fed’s dot plot to exceed market expectations, but expect Powell’s tone to remain dovish.
Key Points:
Market Uncertainty:
- High Uncertainty: The market is highly uncertain about the September FOMC meeting, reflecting varied expectations.
Rate Cut and Dot Plot Expectations:
- Anticipated Cut: BofA expects the FOMC to announce a 25bps rate cut.
- Dot Plot: They predict the Fed’s dot plot will be above market expectations, potentially signaling a more cautious approach to future rate cuts.
Powell’s Likely Tone:
- Dovish Outlook: BofA expects Fed Chair Powell to adopt a dovish tone, emphasizing downside risks to the labor market and expressing willingness to accelerate rate cuts if necessary.
Conclusion:
BofA suggests that any initial hawkish reaction to the September FOMC should be faded. They anticipate that Powell’s statements will lead to a market interpretation of the FOMC as delivering a neutral to dovish cut, despite any initial market movements.
For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here. This article was written by Adam Button at www.forexlive.com.
