Three rate cuts in a row? Investors hope it’s true

Will Federal Reserve Chair Jerome Powell deliver a third consecutive interest rate cut? Investors sure hope so.

The US economy has remained resilient despite weakness in the manufacturing sector, with consumer spending making up for softness elsewhere. Even so, investors expect the Fed to once again issue an “insurance” cut that protects against negative fallout from the trade war and global economic slowdown.

The markets put the probability of a quarter point cut at more than 90%, according to CME Group’s FedWatch tool.

The view: “The deceleration in domestic demand, weaker wage pressures and declining inflation expectations suggests that economic weakness is spreading and that more action may be needed in the coming months,” ING economists said in a note to clients on Friday. They expect the Fed to follow up additional rate cuts in December and January.

That schedule, however, is dependent on the data — and some important indicators will be delivered later in the week.

An advance estimate of third quarter GDP for the United States is expected to come in at 1.7%, according to a Reuters survey of economists. And the jobs report for October, which will post on Friday, is projected to show jobs growth substantially below the 136,000 jobs added in September. (Though the General Motors strike is expected to have a big impact.)

Such releases could make the case for the Fed to keep cutting.