S&P 500 & Nasdaq Analysis and Trends

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Will The Fed Cut Rates in June?
By: Marty Armstrong | May 11, 2024

Right on schedule, Consumer Sentiment has turned down in early May to a six-month low. With all this talk of war, people will naturally pull back and spend less with uncertainty on the future horizon. Interest rates have not declined because of stubborn inflation and the job market, which undermines consumer confidence. Based on recent surveys, consumers expect prices to rise at an annual rate of 3.5% over the next year, up from 3.2% in April.

Our model indicates that as the Neocons wage their endless wars, the economy will turn down, further complicating the upcoming elections. Normally, the Fed should cut the rate as we enter recession in its June meeting. However, as we can see, while we have a Directional Change for the 3rd Quarter, the trend appears that it would still rise thereafter into the 3rd quarter of 2025 due to war. The only potential pressure the Fed might endure is the June 9th EU elections. However, the next meeting will be too late - June 11-12.

When we turn to the Weekly Array of the 10/2yr spread, the computer already targets the week of the next Fed Meeting. It appears that the Fed should cut the rate slightly with the economy moving into recession. But that may be a one-time event when we look at the prospects of war after that, which are always inflationary.

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