Damo: The Federal Reserve, with the labor market at its core, will continue to cut interest rates!

Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said that the Federal Reserve will continue to cut interest rates in November, but policymakers are wary of the situation because inflation is no longer rapidly cooling down.

Shalett said in a forum that the Federal Reserve is now concerned about the “mixed” labor market. “They're no longer chasing the 2% inflation target; they've given up,” she said.

Most Federal Reserve policy makers gave the green light last week to cut interest rates further in the coming months, while Atlanta Federal Reserve Chairman Bostic said interest rate cuts may need to be skipped in November.

“The stock market hasn't realized this yet, but it looks like the bond market is starting to recover in the long term because higher inflation expectations are being priced,” Shalett said.

Last week's data showed that the increase in US CPI inflation in September was slightly higher than expected, while last month's PPI growth rate remained unchanged.

Traders currently expect the possibility that the Fed will cut interest rates by 25 basis points at the November 6-7 policy meeting, abandoning expectations that the Fed will cut interest rates by 50 basis points after strong employment data and other optimistic economic data in September.

Meanwhile, Shalett said that given the intense competition in the US presidential election, she does not expect clear results on November 5, the day of the US presidential election.

Last week's polls showed that Democratic Vice President Harris and former Republican President Trump are on equal footing in seven swing states.

“We encourage our clients to establish positions in so-called 'real assets'... including gold, commodities, real estate, energy infrastructure assets, to avoid rising market fluctuations,” Shalett said. “We also like market-neutral strategies in hedge fund strategies,” she added.