Fed will take out additional “insurance” against recession at the December meeting - ING

As widely expected, the Federal Reserve has cut the target rate 25bp to 1.5-1.75% and analysts at ING point out that The key change in the accompanying statement is that the Fed has dropped the sentence saying that the FOMC “will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion”.

Key quotes

"The fact that equities are at all-time highs and there have been positive trade discussions between the US and China seem to have allayed recession fears. Implied probabilities based on futures contracts are only fully pricing one further rate cut in total with roughly a one in four chance that it comes at the December FOMC meeting."

"The economic data is not as positive with business surveys, such as the ISM series in the chart above, suggesting the US economic slowdown is intensifying."

"Friday’s jobs report is also likely to underline the deceleration story even with the acknowledgment of a temporary distortion due to the GM-related strike. Inflation expectations are also very low and wage growth has moderated recently. "