In this post. BlackRock believes we shouldn't expect a big Fed rate cut. Markets are betting on a Fed rate cut, but inflation and a strong economy will keep rates high.
Traders expect a rate cut of up to 250 basis points by 2025, but #BlackRock says that's an exaggeration.
Analysts warn that a significant drop in interest rates would signal more serious economic problems that could hit risky assets such as #bitcoin . BlackRock says the U. S. Federal Reserve should not be expected to cut interest rates as much as the bond market expects.
He says the U. S. economy is still too strong and inflation is still too high for the central bank to cut rates significantly. Market traders are betting on a 120-basis-point rate cut this year alone and expect a further 250-basis-point cut by the end of 2025.
This would mean that the current interest rate range of 5.25%-5.5% would fall to 2.8%-2.9% by the end of next year.
However, BlackRock believes that these projections are overstated and that the market is preparing for rate cuts similar to those seen during previous recessions. However, the company does not believe it will go that far.
We believe inflation and interest rates will rise in the short to medium term due to a variety of factors, including an aging labor force, budget deficits and geopolitical tensions.
The world's largest asset management firm added that it is taking a bearish stance on short-term U. S. Treasuries.
Bond yields reflect expectations of a significant rate cut, but if the cut is not as deep as people think, bonds will not perform well.
At the same time, BlackRock is positive on stocks, especially artificial intelligence (AI)-related stocks, as it believes AI has long-term growth potential and is therefore overweight in U. S. stocks.
Fed fever is hitting #cryptocurrencies .
investors are skeptical that a rate cut will help the #cryptocurrency market, especially bitcoin. Bitcoin is currently down about 3% to $58,158 after recently breaking the $ 60,000 mark.
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