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A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. With investors confident that big central banks are likely done raising rates, focus has switched to when rate cuts will start. Traders now price in over an 80% chance of a 25 basis-points (bps) ECB cut by April, which had been fully priced for July last week. Piet Christiansen, chief analyst at Danske Bank, said the expectations for ECB rate cuts now reflected a "doom and gloom" scenario. He added the ECB would need to cut rates at least as much as traders expect next year.
Persons: Heiko Becker, BoE, Shamik Dhar, Christine Lagarde, Piet Christiansen, Lagarde, Goldman, Gurpreet Gill, Dario Perkins, Yoruk, Sumanta Sen, Kripa Jayaram, Dhara Ranasinghe, Emelia Organizations: European Central Bank, REUTERS, Traders, ECB, Fed, Federal Reserve, Bank of England, BNY Mellon Investment, Treasury, Reuters, Danske Bank, Asset Management, Lombard, Thomson Locations: Frankfurt, Germany, United States, Europe, U.S, Britain, Israel
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailToday's CPI data confirms the disinflation trend, says Goldman Sachs' Gurpreet GillGurpreet Gill, Goldman Sachs Asset Management global fixed income strategist, joins 'Halftime Report' to discuss fundamental changes reflected in the CPI print, the Fed's rate policy for the remainder of the year and why the yield curve could steepen further.
Persons: Goldman Sachs, Gurpreet Gill Gurpreet Gill, Goldman Organizations: Asset Management
The Federal Reserve hiked rates in July, and it could be the final rate hike of the cycle. But while the latest rate hike was all but certain, there are still plenty of questions about what lies ahead. In a note from Wednesday evening, Goldman Sachs chief economist Jan Hatzius pointed out that Powell made it clear any further hikes will depend on inflation data. But Bank of America analysts led by US economist Michael Gapen remain unconvinced that the rate hike cycle is truly over. As for equities, Wall Street widely expected this week's rate hike, so there are no major changes to their second-half investing recommendations.
Persons: Jerome Powell, Henry Allen, shouldn't, Allen, Goldman Sachs, Jan Hatzius, Powell, Hatzius, Gurpreet Gill, Gill, Peter Hooper, Michael Gapen, Gapen, Goldman's Gill, America's Gapen, Morgan Stanley, Mike Wilson Organizations: Federal, shouldn't, Deutsche Bank, Fed, Goldman Sachs Asset Management, Bank of America, Bank, America's Locations: Wall
With its latest 25 basis point interest rate increase now in the books, the Fed has raised the benchmark overnight interest rate by 525 basis points since March 2022 to a level last seen before the 2007 housing market crash in a fight to bring down inflation. Still, some fixed income investors have remained on edge over how long the Fed can keep interest rates at restrictive levels without sparking an economic downturn. Meanwhile, Fed funds futures traders saw increased probability of another interest rate increase in September. To be sure, investors had badly overestimated the chances for recession at the beginning of this year and could be wrong again. Over the past year the unemployment rate has remained stubbornly low and growth has run consistently above trend.
Persons: Jerome Powell, Gurpreet Gill, Goldman Sachs, Powell, Kristy Akullian, It's, Adam Hetts, Janus Henderson, Mike Sanders, Blair Shwedo, Davide Barbuscia, David Randall, Ira Iosebashvili Organizations: YORK, Federal Reserve, Fed, Goldman Sachs Asset Management, Barclays, BlackRock, Investment, Treasury, Janus, Janus Henderson Investors, Madison Investments, U.S . Bank, Thomson
The rate hike, the Fed's 11th in its last 12 meetings, set the benchmark overnight interest rate in the 5.25%-5.50% range, and the accompanying policy statement left the door open to another increase. The Fed raised (the Fed funds target rate) by a quarter point and the vote was unanimous, and the move puts rates at a 22-year high." "We think recent data is consistent with the US policy rate peaking in July, as core CPI inflation slowed sharply in June. "Fed Chair Powell is going to suggest that for the time being that they need to assess more information for inflation. "Markets are for the most part becoming more confident the Fed won't have to raise rates in September.
Persons: GENNADIY GOLDBERG, J Powell, they've, They're, Powell, we've, ELLEN HAZEN, ” MICHAEL BROWN, JACK ABLIN, BRIAN JACOBSEN, MENOMONEE, ” PETER CARDILLO, Jackson, GURPREET GILL, GOLDMAN, QUINCY KROSBY, ” EDWARD MOYA, We'll, we'll Organizations: YORK, Federal Reserve, U.S, Treasury, Fed, Dow, Global Finance, Markets, Thomson Locations: U.S, WELLESLEY , MASSACHUSETTS, PALM BEACH , FLORIDA, WISCONSIN, GOLDMAN SACHS, CHARLOTTE, NORTH CAROLINA
The Monetary Policy Committee (MPC) has faced both encouraging and worrying news on the economy since a majority voted in early November to raise rates by 0.75 percentage point, the biggest hike since 1989. A big majority of the 54 economists polled by Reuters last week predicted a 0.5 percentage point increase in Bank Rate, which would take it to a 14-year high of 3.5%. Investors mostly agree although financial markets put a roughly 25% chance of another 0.75 percentage point hike. The annual rate of consumer price inflation dropped to 10.7% in November from 11.1% in October, a lower rate than the BoE had pencilled in last month. "We think the Bank will opt for further hikes in the first half of 2023, until inflation shows less momentum."
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