Mon Sep 30 21:22:29 UTC 2024: ## Fed’s Aggressive Rate Cut Sends Shockwaves Through Global Markets
**Mumbai, September 20, 2024:** The Federal Reserve’s decision to cut interest rates by 50 basis points on September 18, 2024, has sent ripples through global markets, impacting everything from US bond yields and the Dollar Index to Indian bond yields and the Rupee.
The Fed’s shift in focus from inflation control to ensuring full employment is evident in the quarterly projections, which indicate a more dovish stance than previously anticipated. This has led to a rise in US bond yields, with the 10-year bond yield closing the week at 3.741%, while the Dollar Index has weakened, closing the week at 100.423.
The Fed’s rate cut has also had an impact on Indian markets. Indian bond yields have remained relatively stable, closing the week at 6.761%, as investors anticipate a similar rate cut by the Reserve Bank of India. The Rupee has strengthened to 83.5/$, with the RBI’s intervention proving unnecessary this week, due to factors like the Dollar Index weakening and robust FPI flows.
The rate cut also impacted commodity markets. Brent Crude prices have held the $70/bbl support level, while spot Gold prices have rallied sharply, closing the week above $2,600/oz. This is attributed to the reduced opportunity cost of holding gold, the geopolitical strife, and the dollar weakness.
The Fed’s aggressive stance has created a new dynamic in global markets, and investors will be watching closely to see how these developments unfold in the coming weeks and months.
First Piper 