Market Sees Rate Cuts As a Sure Thing: Peter Mallouk
The market expects a rate cut to come in September, the leader of RIA Creative Planning says.
Interest rate cuts are almost certainly coming soon, judging from futures contracts based on the Federal funds rate, says Creative Planning CEO Peter Mallouk.
“The market has priced in a 100% chance of a September rate cut, and the market expects additional cuts in November in December,” Mallouk said in a post Tuesday on X, formerly Twitter.
“Interest rate projections over the VERY short run have tended to be spot on, while projections going further out have proven to be generally worthless,” he wrote.
Mallouk included a chart that shows the market is expecting the Federal Reserve’s benchmark interest rate, now just over 5.3%, to end the year at 4.65%. Longer term, the chart indicates that Fed-funds futures data is pointing to a 3.55% rate at year-end 2025.
The Fed, which met met earlier this week, is expected to signal its direction on interest rates this afternoon. Interest-rate swaps show the market is anticipating a quarter-point rate cut at its September meeting, Bloomberg reported today.
In a separate post Tuesday, Mallouk noted that the U.S. economy has been expanding for 51 months. “With the exception of the two-month Covid collapse in 2020, we haven’t seen an economic contraction since 2009,” he said.