Crude softening, Fed cuts could ignite Wall Street rally: Peter McGuire
ADVERTISEMENT Peter McGuire: It's very complex. Looking back over the last couple of weeks, India is clearly absorbing secondary costs. We must also consider recent developments in Alaska and potential positive outcomes from today's meeting in Washington. Hedge funds have cut their bullish bets on WTI by the most in 16 years, which is a strong signal. This suggests a structural decline in oil prices that could continue over the next week or two. At the same time, much depends on negotiations and whether a deal is reached before India's meeting with Washington on the 25th. It's shaping up to be a big week for market developments.
Peter McGuire: WTI is currently around $62.5. I expect the decline to continue, bringing prices into the $50s by year-end. For Brent, which is trading around $65, I expect levels below $60. Overall, momentum points to further softness. OPEC+ dynamics, along with increased US production, will likely keep prices under pressure, which is good news for consumers heading into Q4 and Christmas.
Peter McGuire: Softer crude prices benefit consumers and should help ease inflation. The second factor is monetary policy. All eyes are on the upcoming Jackson Hole symposium and September Fed decisions. There's up to an 80% probability of a rate cut, though the size—50, 25, or even zero basis points—remains uncertain. If, as some policymakers suggest, cuts total up to 1.5% by year-end, that would significantly boost US equities. The coming months will be critical in shaping market direction.
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