Effective Federal Funds Rate Ideas — FRED:EFFR

From Rate Cuts to Tech Booms: What Will Shape Wealth Management The wealth management industry in 2025 is set for transformative changes driven by evolving monetary policies, geopolitical dynamics, technological advances, and the rising importance of personalization. A significant shift will be seen in the Federal Reserve's monetary policy , transitioning from aggressive rate hikes to gradual cuts. This move, with rates projected to stabilize at 4–4.25% by year-end, will reshape investment strategies. Fixed-income assets may lose their current dominance, while equities, IPOs, and other growth-oriented investments are expected to gain appeal. Investors and wealth managers will need to diversify portfolios to adapt to this shifting landscape. Technological innovation, particularly in artificial intelligence and biotechnology, will further influence wealth management. These sectors promise robust growth, yet wealth managers must strike a balance between embracing these opportunities and maintaining diversified investment strategies. While AI tools can enhance decision-making processes, reliance on them without human oversight risks introducing errors and inefficiencies. The industry's focus will be on harmonious integration of technology, using it as an enhancement rather than a replacement for human expertise. Geopolitical developments, including Donald Trump’s upcoming presidency, will add complexity to the market. Bold fiscal policies and potential trade measures could heighten market turbulence, with the risk of trade disputes extending beyond the U.S.-China relationship to Europe. Wealth managers will need to prepare for this heightened volatility, creating adaptable strategies to navigate these uncertain times. At the same time, environmental, social, and governance (ESG) considerations will continue to shape investment decisions. Regional discrepancies in ESG standards, such as those between the EU and the U.S., will pose challenges, requiring wealth managers to align portfolios with varying frameworks. Tax efficiency will also grow in importance as global compliance standards become increasingly intricate, emphasizing the need for location-specific strategies. Emerging markets will capture renewed attention as they evolve, offering opportunities to finance real business growth. However, entering these markets will demand meticulous risk assessment and management to balance growth potential with inherent uncertainties. Diversification across regions and asset classes will be essential in using these opportunities. Ultimately, the future of wealth management will hinge on personalization. Moving beyond generic fixed-income products, wealth managers will prioritize bespoke solutions tailored to clients’ unique risk tolerances and financial objectives. Dynamic, client-focused approaches will replace outdated methods, creating resilient portfolios that adapt to changing market conditions. In 2025, the industry will thrive by embracing diversification, innovation, and a profound understanding of global trends.

Monetary Policy, Technological Advancements: Insights for 2025 The Federal Reserve and Market Dynamics The financial landscape is increasingly influenced by both economic policies and technological advancements. On the monetary policy front, the Federal Reserve is widely anticipated to continue reducing interest rates throughout the year. According to Robert R. Johnson, CEO of Economic Index Associates, projections based on the CME Group's Fed Watch Tool suggest a nearly 60% likelihood of interest rate cuts totaling at least 75 basis points by the end of 2025. These lower rates are poised to create favorable conditions for equity markets by reducing borrowing costs and encouraging consumer spending. Historically, sectors like automotive, apparel, and retail have demonstrated strong performance in such low-rate environments. Blockchain and Cryptocurrencies: Emerging Trends Blockchain technology, which underpins cryptocurrencies, is set to play a transformative role in 2025. Beyond its foundational applications in finance , blockchain is being adopted across logistics, public administration, real estate, and other industries to enhance data security and operational efficiency. This expanding adoption is likely to benefit sectors such as chip manufacturing, cryptocurrency exchanges, and mining companies. As blockchain integration becomes more prominent, investors should monitor how this technology reshapes traditional economic processes and drives value creation across industries. AI and Automation: Catalysts for Transformation Artificial intelligence (AI) and automation continue to emerge as defining technological forces . In 2024 alone, major tech companies allocated $200 billion to AI initiatives. These investments are expected to democratize access to automation and machine learning, generating measurable business outcomes and reshaping industries. Arron Bennett, financial strategist and CFO of Bennett Financials, emphasizes that successful AI implementations will act as catalysts for operational and financial transformation. Early adopters of AI, cloud computing providers, and developers of advanced software and hardware are particularly well-positioned to capitalize on these trends. A Unified Perspective for 2025 Investors in 2025 will face a complex interplay of macroeconomic policies, technological breakthroughs, and evolving regulatory environments. Federal Reserve actions, including potential interest rate reductions, will redefine the cost of capital and market liquidity. Simultaneously, advancements in blockchain and AI promise to create transformative opportunities, reshaping industries and fostering innovation. Key themes such as tariffs, tax policies, and deregulation will also influence corporate profitability and consumer behavior. By remaining vigilant and adaptable, market participants can navigate uncertainties and leverage emerging opportunities to enhance their portfolios. Success in 2025 will depend on a balanced approach that considers both traditional economic factors and groundbreaking technological changes. CRYPTOCAP:TOTAL NYSE:AI

The Bear Party Hasn't Even Started Yet Every major crash in modern history came after rate hikes completed. Either during the plateau or during the first cuts. No bulls can explain how we're going to avoid that fate this time. We hiked twice as fast as 2007 and 2018 hikes, yet somehow there's gonna be a soft landing? Yeah right LOL It's already looking like a broadening wedge like 2000; and about to break the 13yr trendline for the first time since 2020. See inflation chart below: Worst case scenario(red), we get rapid deflation that causes a 6 month bull run at first, but ends with devastating crash. Like 2019, however we can't afford to write more stimulus checks. So there will be a depression, not a recession. No V recovery. Best we can hope for is more inflation(yellow); so the government can try and print it's way out of debt. Chop sideways roughly -50% +100% for a decade or more. Pipe dream is green, the Fed managing to thread the needle and get inflation between 0-3% for years to come. All while the U.S. Treasury manages to service it's interest payments, despite failing to close the gap between tax receipts and spending. This is not going to happen. It's physically impossible to produce 5M qualified workers overnight to fill the gap between job openings and job seekers. Layoffs won't help either. By then the recession is in full swing. Higher taxes coming as well. Growth is dead.

TREASURY YIELDS AND THE FED FUNDS RATE This chart shows the effective federal funds rate in comparison to the 30 year and 3 month yield over the past five years. There are 5 interesting times to look at: 1. Late 2018 long term yields began to peak right before the fed stopped their hiking cycle. Yield curve began to flatten. 2. They then stayed put for about 6 months with the 3MY hovering right around the EFFR. Suddenly, the 3 month yield dips below the fed rate quickly - and they begin dropping their benchmark rate again . 3. Early 2020 the panic of the COVID-19 pandemic caused rates to nose dive and the fed to slash their rate all the way to 0% very quickly. 4. Fed did not raise rates for two years . In early 2022 they began to hike for the first time since 2018. This also coincides with the beginning of the Ukraine conflict. 5. Half a year of steady rate hikes makes it so the EFFR finally passes it's 2018 peak in mid 2022. The 30Y and 30M invert fairly soon after while the fed funds rate overtakes the 30Y yield. Feel free to discuss what you think of these relations and what your predictions are for the future. In my opinion, the more the yield curve inverts the more problems there will be in the financial system. Eventually, term risk will not outweigh the high short-term yields especially once the benchmark rate gets over the inflation rate. I see the fed doing what they are best ate - acting too late.

24. A lesson from my experience - Part 3 Greetings, Lets continue with our discussion. Today, we will try to look at the BIG picture. I started trading in October 2019. The main reason being that I find this to be challenging. I am trying to see if I can find a way to be profitable. Indeed the journey has been quite rough. I was struggling for 2 years trying to learn. But of course, listening to those 'Gurus' and MAIN STREAM only make things worse. As luck would have it, things started to chance in November 2021 when as luck would have it, I saw something on Youtube that makes me started to think. I will explain on what I had learned and shared it with you. I hope you would think about it yourself and apply common sense. I find that all answers are actually quite easy and plain. We can't see/understand if only because we are constantly being influenced by MAIN STREAM. Lets start off with EURUSD. Recently, many 'Gurus' are getting very excited. They are looking at their favorite INDICATOR DXY - RSI - 1W which is now above 80. They are PREDICTING that it is time for Dollar to fall very soon. Of course, the sheep who are following their guru is equally excited. As I have said previously, do not trade based on prediction. Trade based on facts. If you look at the chart above, inflation is way above FFR. You can see that the Fed's Dot Plot released on 17 March 2022 is very aggressive. They followed through with 50 bps hike on 5 May 2022 despite GDP registering a drop of 1.4% on 28 April 2022. Many had again been predicting that the Fed may capitulate and stop further rate hike!!! It was also said that after every financial crisis, the FRR seems to be trending lower. Back in 2019, the higher the FFR went was 2.5%. And going by 'trend', this time around, the rake hikes will not go beyond that. HAHAHAHA.......... only this time they might have forgot how high inflation is. Lets think about this. Would the Fed capitulate? I do not think so. I think the FFR would go on higher. As per the current Dot Plot, it would be 2.80% at the end of this year. The higher the FFR, the less the LIQUIDITY or Money Supply. Only by reducing Money Supply would inflation be tamed. In doing so, GDP would take a hit. Inflation is the most pressing issue at the moment and can not be left unchecked. How do we trade? I think we would just follow closely the next Fed Dot Plot to be released on 5 May 2022. There is no need for us to make any prediction. Just follow. If the Fed maintain the current stance or even tightened further, then expect EURUSD to fall further. Now lets talk about GOLD and BITCOIN. I do not trade them but it would be good for discussion. A lot of 'Gurus' out there has been making prediction that GOLD will go UP because of INFLATION. They advise their sheep to BUY BUY BUY. I guess by now all of them will be scratching their head. May are also scratching their balls. Why isn't GOLD going up? Actually the answer is very SIMPLE. To them, GOLD is not subjected to the law of Inflation. When price of GOLD goes up, they see it as growth or profit. Believe me, when price of GOLD goes up, it is also called inflation because all goods/services for sale on this earth is subjected to INFLATION. Please bear in mind that GOLD and BITCOIN is denominated in USD. Therefore its rise/fall is WHOLLY dependent on the the availability of USD. SO UNDERSTAND THIS, THE PRICE OF GOLD HAS NOTHING TO DO WITH INFLATION. ALL USD DENOMITED ASSETS ARE ONLY IMPACTED BY THE AVAILABILITY OF USD LIQUIDITY WHICH DEPENDS LARGELY ON THE FFR - CURRENT & EXPECTED. You can track the movement of gold to the M2 money supply. If money supply does not grow, where would the money come from to bid up assets price higher? At the moment, USD money supply % growth is falling. Cash is KING. As such, asset price is also falling - Stocks, Gold, Bitcoin etc. Bitcoin - I do not trade it and also do not follow it. But my advise to you is this, do not trade it for one sole reason - it is very very very very very volatile. Remember, we are here to make money, not to take risk. It is not worth the risk. Also remember, never believe anyone who tells you the price of this and that will go up in the FUTURE. No one knows what will happen in the future. They are just preying on your GREED. Focus solely on trading based on FACTS. Wait for 5 May 2022. Look at the Dot Plot. Then just follow. As for now, the Fed is telling you the FFR is projected to be 2.8% at the end of this year. They are not done with rate hikes. Just follow. Don't argue or make opposite predictions. If you find this useful, please share it with other traders. The sole reason I am doing this is that I know a lot of you guys is currently where I was when I first started. I just hope that my experience may be helpful, especially for beginners. Thank you. P/S : as always, do not just believe what I say. Use your common sense.

Effective Federal Funds Rate

EFFR trade ideas