U.S. Interest Rates with Positive Surprise – Rally Acceleration!

Last Updated: 19. Dezember 2023By

Decisions made by major Western central banks are always an exciting event for markets. Interest rates change market rates (of bonds) and, in turn, financing conditions for companies. Indirectly such events have a noticeable influence on corporate profits.

Last Wednesday, it became particularly exciting when the US Federal Reserve held its last interest rate meeting of the year. Although there was little chance that the Fed would raise or lower interest rates, a big surprise was in store.

Investors wanted to know if further interest rate increases were ruled out. This was far from clear. The Fed had previously explicitly left the back door open for a further interest rate increase. But this has now changed drastically.

The US central bank has committed itself. The latest forecasts for economic growth, inflation and the benchmark interest rate make it clear that there will be no further interest rate increase.

But that’s not all. The market now expects up to five interest rate cuts in the new year! This is evident from the latest Fed futures, a kind of betting exchange for future benchmark rates.

The central bank itself is much more cautious. This could become a problem for the markets in a few months if they have to adjust their expectations. But at the moment the markets are pricing in significantly lower interest rates next year. Therefore, such considerations do not play a role. Now it is time to celebrate!

There was jubilation on US stock exchanges due to the prospect of interest rates. This is why the US dollar fell sharply in the past days, gold and bitcoin rose noticeably. But above all, US stocks rose again sharply! The S & P 500 broke out again to new annual highs. And that, even though the index has gained in value by around +15% since the end of October!

With the recent increase, the US leading index is also approaching its all-time high of 4,818.62 points almost exactly two years ago. If it is overcome, then the strong price dip of the past two years will finally be compensated.

The chances for this are very good in the coming months. For this reason, you should now definitely invest in US stocks!