For the first time since 2020, the Federal Reserve is expected to cut interest rates on Wednesday (18) and change the dynamics observed in the market in recent years; find out how to invest in this scenario (Image: REUTERS/ Jonathan Ernst)
By now it is no news to anyone that Wednesday (18) is the most important day of the last few months (and, who knows, of the year) for global markets. This is because, for the first time since 2020, the Federal Reservethe US central bank, must cut the interest rate after a long battle against inflation.
On the same date, the Monetary Policy Committee (Copom) in Brazil is expected to go in the opposite direction and increase the Selic rate. However, the decision, which is always important, is likely to take a back seat, given the high expectations for the Fed's move.
For Empiricus CEO and chief strategist, Felipe Miranda, we are on the eve of “defining a new paradigm for markets”.
“Interest rates are starting to fall in the world’s largest economy after three years in which they only rose. The very high bar prevented anything from being done other than relying on high US interest rates, bonds of major global titles and American artificial intelligence. The world can change from then on”, Miranda summarized.
The question remains: will the Federal Reserve cut 25 or 50 basis points?
As the Federal Reserve's decision approaches, investors are beginning to believe in the possibility of a more aggressive rate cut of 50 basis points.
“This would mark the beginning of a long-awaited cycle of monetary easing with a major impact,” highlights Empiricus macroeconomic analyst Matheus Spiess.
Currently, Fed funds futures indicate a 65% probability of a 50 basis point cutwhile the chance of a 25 basis point cut is 35% – a reversal of what was observed in recent days, when a more “timid” cut was the base scenario.
“While I understand this shift, I remain somewhat skeptical. I believe a 25 basis point cut remains the most likely scenario, as a 50 basis point cut could signal that the Fed is more concerned about the deterioration of the economy than previously thought, indicating that it would be necessary to ease financial conditions to avoid an imminent recession. This darker perception could end up generating concerns among investors, who have so far been relatively confident in the performance of the US economy,” Spiess said.
The analyst highlights that there has not been such a large division among investors regarding the direction of US monetary policy since the 2008 financial crisis.
Perhaps this can give an idea of the importance of the period we are in and which, as Miranda summarized, could represent a “paradigm shift” in the financial markets.
Is your wealth prepared for the US interest rate decision?
As Empiricus' chief strategist explained, the beginning of the monetary easing cycle in the United States should change the entire investment dynamic in the world.
Furthermore, lower interest rates in the US mean less attractiveness in fixed income in the strongest economy on the planet and, consequently, an “injection” of global liquidity – and emerging countries, such as Brazil, tend to benefit.
But do you know if your assets are prepared for the Federal Reserve's decision?
After all, if the world changes, it is important to adapt and position yourself to take advantage of the opportunities of the moment.
Thinking about it, the Money Times prepared for its readers the Super Wednesday Dossier: a compilation of contents 100% free to be informed about what to do with your investments now.
You will know where to point the cannon and direct your resources at this moment and where are the best opportunities to invest.
Check out everything the Dossier will offer:
- 18/09, at 6pm: One high-level debate after the Fed and Copom decisions;
- 19/09, from 9h: Analysis of the main banks and brokers of the country on interest;
- 19/09, at 12pm: Which actions buy after interest rates are set in Brazil and the US;
- Materials, reports and interviews on the impact of monetary policy on investors;
- Full coverage after the release of the Fed and Copom minuteswhich usually “gives hints” about the next decision.
And there's more: if for some reason you can't watch the programs live, no problem: you'll receive a free dossier with all the points covered by the analysts throughout the programs.
It is worth noting that all content offered by Money Times is 100% freewith the purpose of helping investors make the best decisions.
If you are interested in receiving all the information, just click here or the button below.