Investments: Fed Watch
All eyes are currently on the Federal Reserve. As of early September, the market has priced in a 95% probability of a 0.25% rate cut at the Fed meeting next week. The Trump administration has pushed Fed Chairman Jerome Powell to lower rates for some time now, and recent cracks in the labor market, highlighted by Friday’s underwhelming jobs report, have led many investors to feel a cut is warranted. However, inflation has continued to tick higher, with the Consumer Price Index (CPI), which tracks consumer inflation, rising 2.7% over the past 12 months. This figure is well above the Fed’s 2% inflation target. The Producer Price Index (PPI), or inflation gauge from a producer perspective, rose 3.3% over the past 12 months. Producers are currently absorbing the initial round of tariffs costs, but these may be passed onto consumers later in 2025 and early 2026, driving inflation higher. For now, markets remain unfazed, as the S&P 500, known as the index for large-cap U.S. equities, has risen around 30% since its lows in mid-April.
Planning: Alts in 401k?
On August 7th, President Trump signed an executive order that paved the way for alternative investments, such as commodities, private equity, and crypto currency to be added to your 401k. Investors currently remain skeptical of adding these alternatives to their retirement plans, but don’t be surprised to see more and more alternative options being offered for your 401k in the near future.
