What’s the Impact of a Half-Point Rate Cut? (183)

DoubleLine Portfolio Manager Jeffrey Mayberry and Quantitative Analyst Eric Dhall track the Sept. 16-20 week market activity leading up to and in the wake of the Federal Reserve’s big rate cut on Wednesday. Jeff and Eric look at a positive week for stocks (00:43), a down week for the Agg while the 2s10s spread de-inverted (2:00) and rising commodities boosted by energy (4:01). Over in Macro Land (5:20), prints they look at include retail sales, production numbers and what they might mean as a recession herald, jobless claims, and the LEI and its increasingly questioned data signal. They then turn to the big macro news of the week (the year?) for the Topic of the Week (9:40): the Fed’s cut of 50 basis points (bps) to the federal funds rate. Jeff and Eric talk about 25-bp versus 50-bp cut predictions, review Fed Chair Jerome H. Powell’s press conference and his talk of Fed “recalibration,” go through the Federal Open Market Committee’s Summary of Economic Projections and whether the Fed can still stick the soft landing. Looking at next week (21:37), prints will include U.S. PMI numbers; housing prices; consumer confidence; and annual revisions to GDP, which might be impacted by questions about employment data. This episode was recorded Sept. 20, 2024, before market close.