Won Outlook Improves as Intervention Adds to Analysts’ Views

Adrian Zuercher of UBS stated that the equity market has significant upside potential if the Federal Reserve indicates further rate cuts. In an interview with Bloomberg Television, he noted that US markets are currently healthy, bolstered by strong earnings in the third quarter. However, he also mentioned that many investors are positioned for profit-taking, which may lead to fluctuations in the market.

The Federal Reserve's next interest-rate cut may be delayed until 2026 due to persistent inflation, unclear economic indicators, and increasing divisions among Fed officials. Previously, markets had anticipated a near-certain rate cut in December, with some Fed officials also expecting a reduction. However, the current economic landscape suggests a more cautious approach to monetary policy adjustments in the near future.

Bond traders are preparing for a significant influx of data that is expected to clarify the pace at which the Federal Reserve will proceed with interest-rate cuts. These cuts have contributed to the largest gains in US Treasuries since 2020, reflecting a shift in market expectations. The upcoming data release is anticipated to solidify traders' expectations regarding the Fed's monetary policy decisions.

Bonds are on track for their best performance since 2020, driven by Federal Reserve rate cuts that are alleviating concerns over budget deficits. This positive trend in the bond market includes both Treasurys and corporate debt, indicating a shift in investor sentiment as they respond to the monetary policy changes. The Federal Reserve's actions are seen as a significant factor in boosting bond prices, suggesting a favorable environment for fixed-income investments.

Former Federal Reserve Governor Adriana Kugler resigned in August, citing a 'personal matter,' which has since raised concerns among economists and market watchers. Her departure was linked to an internal ethics investigation regarding illegal stock trades. This investigation reportedly stemmed from her financial holdings that did not comply with the central bank's ethics rules, leading to her abrupt resignation.