Fed still has room to go with rate cuts, says BlackRock's Rick Reider

Core Viewpoint - The expectation of a hawkish interest rate cut by the Federal Reserve is prevalent among market participants, with a likely reduction of 25 basis points anticipated [2][3][4]. Interest Rate Outlook - The Federal Reserve is expected to reach a 3% funds rate, with the current labor market data supporting this move despite elevated inflation [4][5]. - There is a debate on whether the upcoming meeting should proceed due to a lack of comprehensive data caused by the government shutdown, but sufficient job market data exists to justify the meeting [5][7]. Market Reactions - A hawkish cut could lead to an increase in interest rates, particularly on the long end of the yield curve, with current rates around 4.17% to 4.18% [8]. - There is a cautious sentiment among investors regarding taking on more significant risks, with some considering waiting for better entry points before investing [9][10]. Global Influences - The influence of Japan on U.S. interest rates has diminished due to technical reasons, but movements in Japanese and UK rates still impact U.S. rates [11][12]. - The current rate backups in Europe present attractive investment opportunities, particularly for European fixed income, due to favorable currency swap effects [13].