Credit Suisse: We expect the Fed to cut rates twice this year, and maintain our "neutral" outlook for the US.
Credit Suisse published its 2024 Q3 economic and investment outlook, with Chief Economist ZHUO Liang believing that the US inflation data falling, the monetary policy being in a tight enough state, and the labor market performance mixed, would push the Fed to start the pace of rate cuts in the second half of this year. ZHUO expects the Fed to cut rates twice this year, with a cumulative rate cut of 50 basis points, and the two rate cuts are expected to happen in September and December respectively. If the Fed cuts rates as Credit Suisse expects, he believes the most favorable interest rate (Prime rate) in Hong Kong will not adjust until 2025. Zhang Haoen, Head of Personal and Commercial Banking Business Investment at Credit Suisse, mentioned that the market generally believes that Trump's return to the White House is highly likely after the attack, and with the recent "Trump trade" resurfacing. This has driven the market to expect Trump to implement "sugar" fiscal policies such as handing out money and cutting taxes after he takes office. On the other hand, the market is also concerned that Trump may introduce more restrictive trade protectionist measures, leading to uncertainty in future US inflation, or even causing inflation to rebound. Zhang Haoen also pointed out that although the Dow Jones Industrial Average recently hit a new high, if the US economy performs worse than expected in the second half of this year, the market may face downward pressure on high valuation sectors, so Credit Suisse maintains a "neutral" outlook on the latest Dow Jones Industrial Average outlook. He suggested that investors should not focus too much on a single market, and suggested that European equity portfolios could be added to personal investment portfolios.