September 2024 Commentary
Market Overview
The U.S. Federal Reserve cut rates by 50 bps on Sept. 18, bringing the target range for the federal funds rate to 4.75%-5.00%, citing a slowing job market, higher unemployment and inflation moving closer to the 2% target. The following day, the S&P 500® went up 1.70% and ended the month at a record 5,762.48, up 2.02% versus August. The revised unemployment rate was 4.2% in August 2024, compared to 3.7% at the end of December 2023.
Central banks around the world also acted on their monetary policies. Mexico’s central bank lowered rates by 25 bps to a target of 10.50%, with the economy undergoing a period of weakness and the Mexican peso remaining volatile. The Central Bank of Chile decided to lower rates by 25 bps to 5.5%, concerned about the weakening U.S. economy and geopolitical factors. In contrast, Brazil moved forward with an increase of 25 bps, citing inflationary pressure, bringing the rate up to 10.75%.
The European Central Bank also cut rates by 25 bps to 3.5%, projecting additional decreases over the course of the year due to slower economic growth. The overall economic softness was also reflected in the HSBC India Manufacturing PMI. The index went down to 56.5 in September from 57.5 in August due to a deceleration in export demand, particularly new export orders, which were the lowest in 18 months.
