Investors are anticipating that the Federal Reserve will not cut rates after its policy meeting this week. However, the debate continues about when and by how much future rate cuts may occur. The Council on Foreign Relations tracks central bank policy rates around the world and their aggregate index is showing a trend of falling rates globally. With central banks in countries such as Switzerland, Canada, and the eurozone cutting rates, speculation is rising that the US Fed may follow suit in the near future.
The primary MoneyShow Chart of the Week focuses on the iShares 20+ Year Treasury Bond ETF (TLT) over the past year. As bond prices move inversely to bond yields, a rising TLT indicates falling yields. The chart shows TLT rising above the 200-day moving average last week and making higher lows in the short term. The Relative Strength Index (RSI) has also been showing signs of improvement. While these trends are tentative, they indicate potential opportunities for profit by shifting investments into longer-term bonds, including government and high-quality corporate bonds, as well as related ETFs and mutual funds.
It is important for investors to be aware of the broader global policy backdrop when making investment decisions. The recent cuts in interest rates by central banks in various countries have implications for the US Federal Reserve and its future rate decisions. By keeping an eye on the trends in central bank policies around the world, investors can better position themselves to take advantage of potential opportunities in the market.
While the Federal Reserve is unlikely to cut rates at its upcoming policy meeting, the debate surrounding future rate cuts remains ongoing. Market participants are eager to understand when and by how much the Fed may adjust rates in the future. With a more favorable global policy backdrop and the potential for further rate cuts in the US, investors may want to consider investing in longer-term bonds and related securities to capitalize on possible profit opportunities.
Investors should closely monitor the movements in the central bank policy rates around the world to stay informed about potential market trends. By staying abreast of global economic developments and central bank actions, investors can make more informed decisions about their investment portfolios. With the current trends pointing towards falling rates globally, there may be opportunities for profit in longer-term bonds and related assets. But it is important to remain cautious and consider the overall market conditions before making any significant investment decisions.
