Why We Could See a Second Interest Rate Cut in 2019

The market didn’t get what it wanted – and made a mess.

On Wednesday, Wall Street got what it was demanding for months – a rate cut.  Instead of cheering the news, the market threw a tantrum.

In fact, a cold response to the Federal Reserve’s quarter point rate cut – and, Fed Chairman Jerome Powell’s description of the move as a “mid-cycle adjustment” – sent markets down more than 333 points just yesterday.  

All after the Fed boss said more rate cuts were not a “sure thing.”

“The market is concerned this might be one rate cut and done, as opposed to an extended cycle,” says Keith Lerner, chief market strategist at SunTrust, as quoted by CNN.  “It’s a bit of a knee- jerk reaction. We’ve had a big run-up.”

“The market is not getting exactly what it wanted.”

A day later – markets are up 260 points.

Markets exploded higher on hopes Jerome Powell may be forced to cut rates again.  

All after The Institute for Supply Management (ISM) said its index of national factory activity dropped to 51.2 in July 2019 — the lowest since August.  That means U.S. factory activity has now expanded at a slower rate for the fourth consecutive month.

All thanks to slowing global growth and trade tensions that continue to pressure manufacturing.

That alone is fueling hope the Federal Reserve could cut rates yet again.  

At the moment, there’s 61.2% probability that we’ll see another quarter point cut by September 2019, according to the CME FedWatch Tool.