JPMorgan

In its penultimate meeting of 2024, the Federal Open Market Committee (FOMC) unanimously voted to lower the federal funds rate by 25 basis points to a target range of 4.50%-4.75%.

The easing cycle continues. Here's how it could impact your portfolio.

U.S. equities remain supported, particularly on the back of robust growth and broadening earnings. However, risks around higher long-end yields and tariff implications don’t seem to be reflected in market prices and could generate volatility ahead.

Moderate growth is supportive of equity returns, and rate cuts could aid a cyclical recovery and diversify opportunities.

With our base case of a soft landing, short rates are likely to be biased lower given declining policy rates, reducing the appeal of cash-like instruments.

Despite lackluster sentiment, Americans have not stopped spending. Consumption is expected to have grown at a solid 3% ann. pace in the third quarter, supporting continued earnings growth for U.S. companies.

The Fed's rate cutting cycle should help lower mortgage rates over time, but it is more impactful for short rates.

After collapsing in the early stages of the pandemic, spending on energy and utilities jumped ~25% in both 2021 and 2022, while gasoline costs climbed to all-time highs.

For investors, it is important to keep an eye on this issue, since, if fiscal recklessness finally causes a meaningful spike in Treasury yields, all financial assets could take a hit.