ETFs Set To Soar On Rate Cuts Signal
Zacks Investment Research | Jun 05, 2019 10:05PM ET
Fed Chair Powell has suspended the three-year monetary policy tightening program and has signaled his openness to cut rates if needed. This is especially true as Powell commented at the Conference on Monetary Strategy, Tools and Communications Practice that “the Fed is closely monitoring the implications of the trade tensions on the economy and would act as appropriate to sustain the expansion, given a strong labor market and inflation near 2% target.”
According to CME Group’s FedWatch tool, expectations of an interest rate cut as soon as July rose to 55.4% from 26.5% a week earlier. Aggravating trade disputes, global recession fears and bouts of weak data triggered speculation of rate cuts.
Tariff Tantrums
Trade tensions between the United States and China escalated last month when Trump more than doubled down tariffs from 10% to 25% on $200 billion of Chinese goods and threatened additional 25% duties on further $325 billion goods. China retaliated with as much as 25% tariff on $60 billion worth of U.S. imports effective Jun 1. Trump also threatened to blacklist Chinese firm Huawei Technologies, forbidding it from doing business with American companies. China might hit back by restricting rare-earth exports to the United States.
Additionally, the Trump administration threatened to slap tariffs on all goods coming from Mexico in a bid to curb illegal immigration. Washington will impose a 5% tariff from Jun 10 that will increase to 10% on Jul 1 if illegal immigration across the southern border is not stopped. Levies will then rise by 5% each month up to 25% by Oct 1. The tariff will permanently remain at the 25% level unless and until the crisis stops (read: Zacks Investment Research
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