Game On

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What's going on?

Were into the fourth down quarter, sorry of the year and investors are lining up their next maneuvers. US third-quarter economic growth huthut hiked higher than economists predictions but the Federal Reserve (the Fed) still tackled interest rates again this week.

What does this mean?

Consumer spending led the charge behind a stronger-than-expected American economy last quarter. That mightve been thanks to some tactical gameplay from the Fed, whose previous rate cuts have made saving less rewarding and should, in turn, encourage spending. Thats especially true since more Americans than ever were working, not to mention earning more than they were the same time last year. Still, inflation the rate at which prices of goods and services increase hasnt risen as much as the Fed wouldve liked. Its likely hoping that cutting rates further will coach consumers into even more spending thatll push up prices and businesses too, whose investment took a pummeling last quarter.

Why should I care?

The bigger picture: Interception!


After its cut, the Fed said itll effectively leave the US economy be for a while. So absent an unexpected touchdown or foul ball, the country will be running plays on its own. The signing of an initial US-China trade deal should, for one, help boost demand for American products and could push their prices up. But without an all-encompassing long-term deal which China doesnt think is possible inflations unlikely to rise high enough to justify intervention from the countrys economic referee.



For markets: The crowd goes wild!


Stock prices hovered at record highs this week. And given that over 90% of investors correctly anticipated Wednesday’s rate cut, the continued ascent of stocks is instead likely down to two other factors: better-than-expected economic data (which suggests higher momentum this quarter) and companies better-than-expected quarterly updates. That also makes it 18 of the last 19 Fed rate cut announcements where stocks have climbed soon after.

Originally posted as part of the Finimize daily email.

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