Towards a decline in US rates since September? Goldman Sachs and Citigroup rely on cash relaxation

Goldman Sachs, Citigroup and Wells Fargo bet on a decline in September

While the Fed is resistant to Trump and maintains its rates, some of the major US financial institutions, Goldman Sachs, Citigroup and Wells Fargo, they predict the first drop in interest rates by Federal Reserve in September.

By the end of the year, the cycle of three consecutive drops, a total of 75 basic points. This perspective is based on the need to support the slowdown of economic activities and at the same time stimulate private investments.

For these actors, time would affect monetary policy to prevent too much weakening of growth. This scenario revives the interest of investors in risky assets, especially cryptos, traditionally sensitive to liquidity conditions.

These expectations of monetary relaxation are based on several well -established economic mechanisms:

• Lower rates facilitate access to a loan that supports investments in speculative assets such as bitcoins;

• The decline in rates tends to weaken the dollar, increasing the attraction of assets denominated in other currencies or decorated from the traditional currency system;

• Money release increases the risk of investors who then seek higher revenues in unconventional assets, such as cryptos;

• Historically, lower -rate cycles often coincided with the bull phases on the market crypto, especially during the period of high liquidity.

This dynamics, if it takes place, could mean a turning point after a long sequence of money that weighed throughout the market. However, this optimistic reading is far from unanimous.

Increased caution to JPMorgan and Morgan Stanley

Unlike Goldman Sachs, JPMorgan and Morgan Stanley show significantly more reasonable posture in terms of rate development.

JPMorgan is actually planning a single decline of 25 basic points, but only in December, three months after the first screening of its competitors. Morgan Stanley, on the other hand, does not expect any reduction in rates this year due to persistent uncertainty about the state of the economy and inflationary risks.

This deficiency of consensus reveals the complexity of contemporary macroeconomic analysis, as well as the difficulty of precisely the prediction of the Fed’s decision.

Such different projections take place in a tense context, marked by the maintenance of interest rates at the end of the Fed session in July. President of the institution Jerome Powell expressed concern about slowing growth without exclusion of the possibility of further tightening if the economic conditions required.

This mixed signal has helped reduce the momentum of the crypto market, which is already cooled by uncertain global context. This is added to the potential impact of Donald Trump’s business policy, including a new wave of customs duties that could weigh the US economy and lead the Fed to review its priorities.

In this climate, uncertainty flashes the crypto market. For example, Bitcoins are currently around $ 114,000 in the consolidation phase, a level that reflects waiting -a -see attitude. The view of the decline in rates is a potential bull. If the Fed decided to maintain or even raise its rates, this could cause a new phase of correction on the market that is already weakened by months of money. On the contrary, softening could open the way to general reflection.

Renunciation

The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.