Fed Announces Rate Cuts and Resumes QE

Summary

The Federal Reserve announced a 25 basis point rate cut, lowering the target range to 3.50%-3.75%, and restarted balance sheet expansion with a $40 billion short-term Treasury purchase program. This move aims to counteract employment slowdown risks and has led to a market rally, with the Dow Jones and Russell 2000 indices rising.QQ News+ 3

Impact Analysis

So the Fed’s basically admitting that the economic outlook isn’t as rosy as they’d hoped. By cutting rates and restarting balance sheet expansion, they’re trying to inject liquidity and stave off a deeper slowdown, especially with employment data looking shaky. The timing is crucial—right before year-end, when market liquidity can be tight, and it seems they’re preparing for potential volatility. The market’s reacting positively, with equities rallying and the dollar weakening, which could boost exports. But there’s a risk here—if this doesn’t stabilize the job market, we might see more aggressive easing next year. For the portfolio, this could mean looking at sectors that benefit from lower rates and a weaker dollar, like tech and industrials, while being cautious about financials that might suffer from compressed margins. Keep an eye on gold and silver too, as safe havens are gaining traction.QQ News+ 3