MARKET OUTLOOK - No Matter the U.S. Election Results, the Fed Will Cut Rates

Forex - DBS Senior Interest Rate Strategist Eugene Leow argued that the Fed would lower interest rates this week, regardless of the U.S. election outcomes. Leow noted that, particularly as headline inflation has decreased to 2.4% annually, real Fed funds rates have risen to 2.6%, which is considered high by any standard, providing the Fed with considerable room for further cuts. Over the past few weeks, expectations of a Trump win have led to the formation of a term and inflation premium. However, according to Leow, scenarios other than a Trump victory and a Republican takeover could lead to a relief rally in U.S. Treasury bonds.