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☆ Wall Street is confused and divided over how many times the Fed will cut rates this year
▼ + stars: | 2024-05-02 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Wall Street reacted Thursday to this week's Fed meeting, with forecasts scattered across a range of outcomes for where monetary policy heads next. Most economists for the biggest forecasting firms expect the central bank to lower benchmark interest rates sometime later this year. Goldman left in place its call for two rate cuts this year of a quarter percentage point each, with one in July and the other in November. "If inflation comes in stronger than in our baseline, we would expect the first rate cut to be postponed to December," he wrote. For 2025, we continue to expect four rate cuts."

Persons: Goldman Sachs, David Mericle, Powell, Goldman, Andrew Hollenhorst, Morgan Stanley, Ellen Zentner, Marc Giannoni, Michael Gapen, Michael Bloom Organizations: Fed, Futures, Group, Citigroup, Barclays, Bank of America

☆ Wall Street has adjusted its expectations for when the Fed starts cutting rates
▼ + stars: | 2024-02-01 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Traders have moved out the probability of a March easing from around 90% in recent weeks to a coin-flip in the days leading up to this week's Federal Open Market Committee meeting to about a 1-in-3 chance Thursday. That's not to say the market still doesn't think the committee will cut rates sharply this year, but any dialing back now probably won't come quite as soon as expected. For the most part, Wall Street commentary showed an expectation that the Fed will cut at least four times this year, likely beginning in either May or June. "As inflation falls, real rates become more restrictive, and we think gaining consensus to cut will be easier." Most of Wall Street expects the FOMC to skip November, as the meeting falls the same week as the U.S. presidential election.

Persons: Jerome Powell, That's, Matthew Luzzetti, FOMC, Morgan Stanley, Ellen Zentner, Goldman Sachs, Goldman, Powell, David Mericle, Michael Gapen, Marc Giannoni, — CNBC's Michael Bloom Organizations: Traders, Deutsche Bank, Dow Jones, Fed, Wall, U.S, Bank of America, Barclays

☆ Welcome to the (almost) red-hot bond market
▼ + stars: | 2023-11-15 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow. Surging mortgage rates over the past few years have sent home loan applications and home sales down sharply. The 30-year fixed rate mortgage was also advancing towards 8% — a level not seen since the dot-com bubble popped in 2000. Those raging Treasury yields brought pain to investors and also increased how much American companies had to pay to service their debts. In fact, Wall Street is struggling to figure out what it means for the timing and scale of future rate cuts.

Persons: ”, Michael Hartnett, Gina Bolvin, “ We’re, Phillip Wool, Goldman Sachs, Morgan Stanley, Ellen Zentner Organizations: New, New York CNN, New York Federal, Treasury, Dow, Bank of America, Bolvin Wealth Management, Mortgage News, Mortgage, Association, Financial, Consumer, Federal Reserve, Goldman, Fed, UBS, Airlines for America, AAA Locations: New York

☆ New economic rules shatter US bonds’ crystal ball
▼ + stars: | 2023-09-19 | by ( Ben Winck | ) www.reuters.com time to read: +8 min

Yield curve “inversions” belong to the latter group. At first sight, they are right: Yield curve inversions have been a consistent predictor of future downturns. Yield curve inversions take place when the yield on short-dated government debt climbs higher than that on longer-term bonds. Lower long-dated bond yields are seen as a sign that investors predict lower rates due to an economic downturn. As such, yield curve inversions have become a popular forward indicator of economic recessions.

Persons: Treasuries, There’s, Eugene F, Fama, Kenneth R, joblessness, Morgan Stanley, Ellen Zentner, Francesco Guerrera, Sharon Lam, Aditya Sriwatsav, Oliver Taslic Organizations: Reuters, San Francisco Federal Reserve, Fed, New York Fed, Morgan Stanley U.S, Treasury, European Central Bank, Thomson Locations: United States, U.S, Covid

☆ How more than a trillion dollars in U.S. government infrastructure spending can boost these 3 industrial stocks
▼ + stars: | 2023-08-11 | by ( Morgan Chittum | ) www.cnbc.com time to read: +8 min

The U.S. government is deploying trillions of dollars of stimulus money into infrastructure investments, boosting the prospects for a number of industrials in the Club portfolio. Club names Honeywell (HON) and Emerson Electric (EMR) might also grab some of the IRA's funding for green energy. Gains were linked to a boost in demand for construction equipment because of the "once in a generation" Infrastructure bill. As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. The White House's infrastructure plan estimates to set aside approximately $35 billion for Texas projects.

Persons: Joe Biden, Emerson, Morgan Stanley, Economist Ellen Zentner, Zentner, Larry Fink, Jim Umpleby, Jim Cramer, Josh Pokrzywinski, Jim Cramer's, Jim, Brandon Bell Organizations: Club, Infrastructure Investment, Jobs, Act, Caterpillar, Honeywell, Emerson Electric, Morgan Stanley Chief, Economist, CNBC, CAT, Inflation, Bank of America, National, Software, Control, Getty Locations: U.S, North America, Houston , Texas, Texas

☆ Wall Street economists say rate hikes are over, even if the Fed won't admit it
▼ + stars: | 2023-07-27 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

At least that's the opinion across much of Wall Street, where the money is rising on the likelihood that Wednesday's quarter-point rate hike was the last one before the Fed goes on pause, then ultimately starts cutting. "Powell said that the FOMC will be particularly focused on the inflation data, and we expect the next few [consumer price index] reports to be soft," Mericle wrote. The implied fed funds rate for the December contract is at 5.41%, just above the midpoint of the 5.25%-5% target range following Wednesday's hike. And to be sure, not everyone on the Street thinks the Fed is done this year. The latter mark references Giannoni's belief that the Fed is probably more likely to hike twice more than it is to stop.

Persons: they're, Goldman Sachs, David Mericle, Goldman, Jerome Powell, Powell, Mericle, Dow Jones, Matthew Luzzetti, Morgan Stanley, Ellen Zentner, Zentner, That's, he's, Marc Giannoni Organizations: Federal, Traders, CME Group, Gross, Commerce Department, Deutsche Bank, Fed, Bank of America, Citigroup, Barclays Locations: Wall

☆ Famed economist David Rosenberg says home prices are set to fall further as buyers retreat to the sidelines and a hawkish Fed means stubbornly high mortgage rates
▼ + stars: | 2023-05-26 | by ( William Edwards | ) www.businessinsider.com time to read: +5 min

With mortgage rates unlikely to budge and incomes unlikely to grow, prices are due to drop. Housing affordability is calculated by accounting for three variables: home prices, mortgage rates, and incomes. Ian Shepherdson, the chief economist at Pantheon Macroeconomics who said in the 2005 that a housing downturn would spark a recession, made the same argument in recent weeks. Now that's quite striking because mortgage rates are no longer at peak, but applications are still falling. This would send interest rates — and therefore mortgage rates, which trade closely with Treasury rates — higher, further hurting demand and affordability, Moody's Chief Economist Mark Zandi recently told Fortune.

☆ A chief economist who called the 2008 housing crisis says home prices are set to drop another 15% as falling mortgage rates and a recession will create a supply-demand imbalance
▼ + stars: | 2023-05-09 | by ( William Edwards | ) www.businessinsider.com time to read: +5 min

This will drag 30-year mortgage rates — which track closely with 10-year Treasury rates because they typically have a lifespan of around 12 years — down to 6% or lower. One might argue that falling mortgage rates would also stimulate demand enough to meet the rise in supply, holding prices relatively steady. Now that's quite striking because mortgage rates are no longer at peak, but mortgage applications are still falling. Tight monetary policy and a pullback in lending will lead to a cooling labor market, he said, and that's bad for housing demand. Below is the National Association of Realtors' Housing Affordability Index, which takes into account incomes, home prices, and mortgage rates.

☆ 'The equity market is poised to struggle in the weeks and months ahead': Comerica Bank's CIO says the S&P 500 is primed for a 15% drop as weak earnings, high valuations, and a hawkish Fed all work aga
▼ + stars: | 2023-04-22 | by ( William Edwards | ) www.businessinsider.com time to read: +6 min

Year-to-date, the S&P 500 is up 8%. Plus, when the Consumer Price Index is between 4-6% like it is now, it usually dictates that the S&P 500 trades at a lower multiple than it is. "For example, at the current S&P 500 P/E of 19, the earnings yield for stocks is 1 divided by 19, or ~5.2%. While he sees 15% downside in the months ahead, he also believes the S&P 500 will return to current levels by the end of 2023. Morgan StanleyWilson has also repeatedly warned of an earnings recession ahead, and recently said that the pullback in lending from banks strengthens his case.

☆ Premarket stocks: The Grinch comes for retailers
▼ + stars: | 2022-12-16 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +6 min

What’s happening: US retail sales, which measure the total amount of money that stores make from selling goods to customers, fell 0.6% in November, the weakest performance in nearly a year. The Fed factor: November’s report could indicate that consumers are feeling the double-punch of sky-high inflation and painful interest rate hikes from the central bank. This retail sales data adds to recessionary concerns, as it suggests that consumers may be becoming more cautious with their spending. Those increases were spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. The Fed announced on Wednesday that it will continue to raise interest rates — albeit by a smaller amount than it has been.

But since mid-May, when rates futures markets began to bet outright that the Fed would cut rates in the second half of next year, markets have stabilized. Rates futures have raised the 2023 implied fed funds terminal rate by 400 bps to around 5% and the Fed has raised its 'dot plot' forecasts, in a broadly lockstep move. But since mid-May the implied 2023 terminal rate has been brought forward to the first half of the year, and rate cuts have been priced into the second half. Yet policymakers' 2023 economic growth forecast has slumped to 0.5% - it was 2.25% in March - and they now see unemployment topping 4.5%. Powell's comments are pushing Wall Street lower on Thursday, but interest rate markets largely have dismissed them and continue to price in more than 50 bps of rate cuts next year.

☆ The two words investors want to hear from Wednesday's Federal Reserve meeting
▼ + stars: | 2022-11-02 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

As markets look for signs that the Federal Reserve is stepping away from its breakneck pace of interest rate hikes, two words from this week's meeting could be crucial. No one is expecting the Fed to stop rate hikes, at least for several months. "The November FOMC meeting is not about the November policy rate decision. Instead, the meeting is about future policy rate guidance and what to expect in December and beyond." Even with the step-down hopes from Wednesday's meeting, market expectations are still for a fairly aggressive Fed.

☆ MORGAN STANLEY: Buy these 9 stocks now because they'll be among the only winners as the market struggles with the combination of falling demand and growing supply
▼ + stars: | 2022-10-12 | by ( Marley Jay | ) www.businessinsider.com time to read: +3 min

Morgan Stanley says many companies are solving their supply chain woes and building inventory. The good news is the supply chain messes of the post-pandemic world are finally clearing up. "Increasing supply and falling demand is likely to spark discounting, adding fuel to the earnings slowdown we are calling for." Morgan Stanley says consumers are getting pessimistic, with more of them worried their finances will be worse in a year instead of better. Several are from industrial sectors, which Morgan Stanley says are relatively protected from further supply chain problems.

☆ 'Bring the pain': Major banks raise forecasts for rate hikes after Fed's stern actions
▼ + stars: | 2022-09-22 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

Goldman Sachs The call : A 75 basis point move in November, 50 basis points in December and 25 basis points in February, for a peak of 4.5%-4.75%, up half a percentage point from the previous expectation. Citigroup The call : November to see 75 basis points, followed by 50 in December and 25 in February, adding a cumulative 25 basis points for a terminal rate of 4.5%-4.75%. Both calls were 25 basis points higher than previous. One more 25 basis point hike in February, followed by a 50 basis point cut "in the latter portion of the year." UBS The call : 75 basis points in November, another 50 in December, with three 25 basis point cuts later in 2023.

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