• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick Here are some money moves to make before the Fed starts cutting interest rates
Editor's Pick

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

by July 26, 2024
by July 26, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

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
You Might Also Like
  • A Perfect Storm Creates Seismic Changes for IoT in 2023, Predicts Eseye
  • UnitedHealth CEO suddenly steps down for ‘personal reasons’
  • U.S. homebuilders raise alarm over tariffs as sentiment falls to 5-month low
  • Federal Reserve chair hints at a pause in rate hikes when central bank meet next month
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Trump greets Netanyahu at Mar-a-Lago, says World War III could happen if Harris wins
next post
OpenAI announces a search engine called SearchGPT; Alphabet shares dip

You may also like

Nintendo Switch 2 retail preorder to begin April 24 following...

April 20, 2025

American Eagle profit soars, but sales grow slower than expected

May 30, 2024

Walgreens doubles down on prescription-filling robots to cut costs, free...

May 13, 2025

‘Pharmageddon’ could close pharmacies as protest spreads

November 1, 2023

Congress approved a TikTok ban. Why it could still be...

April 26, 2024

Rush orders, cut costs, crossed fingers: How small businesses are...

December 2, 2024

Walmart rolls out new training programs for skilled trades as...

June 6, 2024

Trump Media shares end week down nearly 20%, losing billions...

April 13, 2024

Social Security Administration to remove food assistance as barrier to...

March 29, 2024

Microsoft reveals its first quantum computing chip, the Majorana 1

February 20, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


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

    Recent Posts

    • Is This Rally Sustainable? You Better Bet Your Bullish Sweet Dollar It Is!

      June 30, 2025
    • Pullbacks & Reversals: Stocks Setting Up for Big Moves!

      June 30, 2025
    • Microsoft says goodbye to the Windows blue screen of death

      June 30, 2025
    • The Best Five Sectors, #25

      June 30, 2025
    • Apple reveals complex system of App Store fees to avoid E.U. fine of 500 million euros

      June 30, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,619 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,903 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,594 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,559 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,436 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,153)
    • Investing (538)
    • Stock (2,643)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Is This Rally Sustainable? You Better Bet Your Bullish Sweet...

      June 30, 2025
    • Pullbacks & Reversals: Stocks Setting Up for Big Moves!

      June 30, 2025
    • Microsoft says goodbye to the Windows blue screen of death

      June 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,153)
    • Investing (538)
    • Stock (2,643)

    Disclaimer: RoundTableThoughts.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 © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Heineken CEO on Bud Light campaign...

    August 2, 2023

    Home sales slipped unexpectedly in April...

    May 23, 2024

    The U.S. economy added 187,000 jobs...

    August 9, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here