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The Tell: Is the Fed on the verge of sparking a stock-market ‘melt-up’?

The Federal Reserve is almost certain to cut rates at the end of July — but don’t expect a melt-up in equities, usually marked by a powerful rally followed by a substantial selloff, says Mark Haefele, global chief investment officer at UBS Global Wealth Management.

In a research note dated July 15, Haefele says stock-market bulls are enjoying a so-called Goldilocks environment, where the market will see benchmark borrowing costs lowered even though the economy remains relatively healthy, albeit slowing in some parts.

At the conclusion of the Federal Open Market Committee’s two-day gathering July 31, Wall Street is betting a quarter-of-a-percentage-point rate reduction of the federal funds rates which currently stand at a range of 2.25%-2.50% at the conclusion of the Federal Open Market Committee’s two-day gathering July 31.

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