JPMorgan Chase and Bank of America have recently revised their forecasts regarding a potential interest rate cut by the Federal Reserve in November. Citing a robust labor market, both banks now expect the Fed to implement a quarter-point reduction, shifting away from earlier predictions that suggested a more substantial cut due to anticipated economic weakening.
The change in outlook follows a strong employment report released on Friday, which showed better-than-expected labor market conditions. Michael Feroli, JPMorgan's chief U.S. economist, emphasized that the solid jobs market simplifies the Fed's task of normalizing interest rates. He noted that significant economic deterioration would be necessary before the central bank considers a more aggressive easing strategy.
Aditya Bhave, an economist at Bank of America, echoed Feroli's perspective, describing the recent economic data as "remarkably strong" and deeming a half-point cut unnecessary. He also expressed optimism about future economic growth, pointing to rising productivity.
In a related context, the total money supply across the U.S., Eurozone, Japan, and China has reached a historic high of $89.7 trillion, having increased by $7.3 trillion over the past year. The M2 money supply, which encompasses physical currency and various deposits, has been steadily growing since February.
This growth in the money supply has contributed to rising asset prices, particularly gold, which is approaching $2,700. The surge in gold prices has accelerated following geopolitical tensions, notably after Iran's missile attacks on Israel, which were described as retaliation for recent assassinations involving Hamas leaders.
Additionally, Societe Generale has entirely shifted its commodity allocation to gold, motivated by geopolitical risks and a weakening overall commodity market. The French bank has increased its gold holdings to 7% of its total asset allocation, marking a 40% rise quarter-over-quarter. This strategic pivot underscores growing confidence in gold as a safe-haven asset amid ongoing global uncertainties.
October 2024, Cryptoniteuae