Interest Rate Cuts
From the Ag Information Network, I’m Bob Larson. One commodities expert says the markets seem to anticipate an interest rate cut during the Fed’s September meeting, some shockingly high.
However, Arlan Suderman, the chief commodities economist for StoneX, says the market is pricing in expectations for a somewhat more reasonable September rate cut of 25 basis-points …
SUDERMAN … “I do think that will happen. Not necessarily in agreement with it, but I think the Fed clearly knows what the market expects, and at the last meeting and the recent comments that have been made in public, it has done nothing to dispel that thinking of a rate cut in September, although it's maintained its neutrality and not committing to it.”
But, Suderman says a 50-basis point rate cut is unrealistic …
SUDERMAN … “Right now, I think the market would interpret that as, ‘Oh my, the economy must be in trouble’ if they did a 50 basis-point rate cut. Frankly, the data doesn't support that, and the Fed continues to talk about being data-dependent.”
Nevertheless, Suderman says the markets are pricing in larger rate cuts than that …
SUDERMAN … “The market's pricing in a full 100 basis-point rate cut by the end of the year. So that would be a full percentage reduction in the benchmark interest rate by the December meeting, and 200 basis points by next summer, by the July meeting, and I think that's just frankly ridiculous.”
Arlan Suderman of StoneX.
