The market is projecting a 50bps Fed rate cut now! - Part 3.

Why did we say this 50bps cut epitomised a deeper problem?  Furthermore, the US Fed had indicated that there would be more to come in 2024.

https://sg-stock.blogspot.com/2024/09/the-market-is-projecting-50bps-fed-rate_19.html

Let's take a look at the circumstances whereby the US Fed undertook 50bps cuts in the past.

1. 2008 Recession - US Fed implemented several 50 bps reductions.

2. 9/11 2001 terrorism - US Fed made a 50bps reduction and some emergency rate cuts.

3. 1997/98 Asian financial crisis - US made a 50bps reduction.

When we look at the above circumstances, we can tell that the US Fed will cut rates by 50bps under severe circumstances.  By cutting the Fed rates by 50bps shows that the US is in a severe circumstance now.  Thus, the US won't need to fudge its economic data anymore and we believe the future data will look bleaker.