As the ECB pauses its cycle of monetary easing, all eyes are now on the Federal Reserve. On September 17, Jerome Powell could announce a highly anticipated rate cut, at a time when politics and the economy are more intertwined than ever. This decision will weigh on markets, currencies, and investor confidence for the coming months.
In its latest letter, Dorval AM highlights three key points:
- The Fed takes the baton from the ECB: after a pause since December 2024, the Federal Reserve is expected to announce its first rate cut on September 17, amid a slowing job market and moderating wage growth.
- Prospects for monetary easing: markets anticipate several rate cuts by March 2026, which supports equity market momentum in developed countries.
- Balanced management with Dorval Convictions: this fund, which had 65% exposure to European equities at the start of September and is up +8.2% YTD, combines responsiveness, strategic vision, and risk management.
5 key takeaways:
- The U.S. unemployment rate has risen to 4.3%, confirming a slowdown in the labor market.
- Wages are up 3.7% year-over-year, at the lowest level of this cycle.
- The Fed has significant room to maneuver with rates still very restrictive (4.3% versus a “neutral” 3%).
- The rate cut cycle could bring the policy rate to just above 3% by March 2026.
- This monetary dynamic remains one of the pillars of the stock market rally observed over the past several quarters.
Find the full analysis and charts in the complete Dorval newsletter
