By Vivek Dubey
CNBC-TV18.com
Published Sept 05, 2024
The US Federal Reserve is set to make its first interest rate cut in over four and a half years on September 18. The key question: How much of a cut?
Morgan Stanley’s Michael Wilson emphasizes that the upcoming US jobs report will be crucial in determining whether the Fed cuts rates by 25 or 50 basis points.
Citi Research anticipates a 50 basis point cut if the US economy adds at least 125,000 jobs and unemployment remains at 4.3%.
A 50 basis point cut could surprise markets, potentially leading to a sharp stock market rally and a weaker dollar. Emerging markets like India may benefit.
US bond yields are highly sensitive to job data. A significant rate cut may lead to further increases in yields.
IT services giants like TCS, Infosys, and Wipro may see stock price changes based on dollar fluctuations, as their revenue is predominantly dollar-denominated.
A large rate cut could signal economic concerns, potentially weighing on oil and gold prices. However, a weaker dollar may mitigate losses.
With July’s data revealing a rise in unemployment and a hiring slowdown, the jobs report remains a critical monthly event, influencing both stock and bond markets.