Sport Investors League
  • Politics
  • Stocks
  • Investing
  • Business

Sport Investors League

  • Politics
  • Stocks
  • Investing
  • Business
Business

Here are some money moves to make before the Fed starts cutting interest rates

by admin July 27, 2024
July 27, 2024
Here are some money moves to make before the Fed starts cutting interest rates

With interest rate cuts from the Federal Reserve on the horizon, it could be a good time to shift cash, experts say.  

Traders expect a rate cut in September, according to the CME FedWatch Tool, which could lower the target range for the federal funds rate by a quarter percentage point or more.

Meanwhile, many investors are sitting on hefty cash allocations, including trillions in money market funds, which are generally still paying above 5%.

After a series of rate hikes, investors piled into money market funds, which typically invest in shorter-term, lower-credit-risk debt, such as Treasury bills.

Total U.S. money market funds hovered near a record of $6.15 trillion as of July 17, with $2.48 trillion in funds for retail investors, according to Investment Company Institute data.

However, money market fund yields will likely fall if the Fed starts cutting rates in September, explained Ken Tumin, founder and editor of DepositAccounts.

“Most [money market funds] seem to closely follow the federal funds rate,” he said.

Next week’s Fed meeting could signal whether a September rate cut will happen. But banks typically start slashing rates for high-yield savings accounts and certificates of deposits ahead of Fed rate cuts, Tumin said.

“CD rates will likely fall pretty quickly once it becomes clear that the Fed is on the verge of cutting,” he said.

As of July 25, the top 1% average rate for high-yield savings accounts was hovering below 5%, while the top 1% for one-year CDs was around 5.5%, according to DepositAccounts.

CD rates will likely fall pretty quickly once it becomes clear that the Fed is on the verge of cutting.

It is a great time to “lock in rates” for a 9-month or one-year CD, said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta. Jenkin is a member of CNBC’s Financial Advisor Council.

When building a bond portfolio, advisors consider duration, which measures a bond’s sensitivity to interest rate changes. Expressed in years, the duration formula includes the coupon, time to maturity and yield paid through the term.

Some experts suggest shifts from money market funds to longer-duration bonds for longer-term investments, which could pay off once interest rates fall.

Bond prices typically rise as interest rates fall, whereas money market fund investors can expect lower yields without price appreciation.

While it is difficult to predict Fed policy, bonds could see “a healthy lift” if the Fed cuts interest rates by a full percentage point over the next year, Jenkin said.

Like any investment, the best place for cash ultimately depends on your goals, risk tolerance and timeline.

This post appeared first on NBC NEWS

0
FacebookTwitterGoogle +Pinterest
previous post
Small Caps Surge, Markets React to TSLA & GOOGL Earnings
next post
OpenAI announces a search engine called SearchGPT; Alphabet shares dip

Related Posts

Dollar General CEO warns consumers are cash-strapped and...

March 15, 2025

Amazon increases average pay for warehouse workers and...

September 20, 2024

Microsoft confirms performance-based job cuts across departments

January 11, 2025

Nvidia passes Apple in market cap as second-most...

June 7, 2024

With Trump all-in on crypto, bitcoin bulls bet...

February 15, 2025

Adidas to cut up to 500 jobs after...

January 27, 2025

A man once sued by the SEC wins...

May 22, 2025

Why JPMorgan Chase is prepared to sue the...

September 30, 2024

Trump moves to develop sovereign wealth fund to...

February 5, 2025

Streaming overtakes cable and broadcast as the most-watched...

June 19, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent

    • Five possible futures for Middle East from renaissance to rockets

      October 20, 2025
    • ‘Untold damage’: Global assisted suicide movement targets children

      October 20, 2025
    • Two IDF soldiers killed amid ‘severe’ ceasefire violation, ‘it’s not the last,’ analyst says

      October 20, 2025
    • Is Trump’s ‘heat’ on Venezuela the start of a wider campaign for regime change?

      October 20, 2025
    • DAN GAINOR: The England we love is lost. If we don’t change, America will be, too

      October 20, 2025

    Categories

    • Business (1,120)
    • Investing (3,290)
    • Politics (4,012)
    • Stocks (1,155)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: sportinvestorsleague.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 sportinvestorsleague.com | All Rights Reserved