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The US economy is expecting a mild recession


August, 07 2024
watermark Economic news

The US stock market showed significant volatility last week. After the S&P 500 index fell by 3% on Monday, there was a 1% increase on Tuesday, restoring the Nasdaq's position. 


The VIX index, reflecting expectations of volatility, fell to 28 points after a peak of 60 points on Monday. 


These fluctuations influenced the forecasts for changes in the Fed's interest rates. The futures market expects a rate cut of 136 basis points in 2024 and another 97 basis points in 2025. 


Analysts believe that the current level of interest rates (5.25-5.5%) gives the Fed the opportunity to support the economy. They forecast a 50 basis point rate cut in September and a gradual 50 basis point decline over the remainder of 2024. 


The projected volatility of the S&P 500 in three months is now higher than in a year, indicating growing concerns that the Fed may make a mistake in its monetary policy. 


Despite the weak employment data, analysts consider the probability of a recession to be minimal. They predict a mild slowdown in economic growth in the United States, with growth rates reaching a minimum just below the long-term average.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.