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☆ Just like that: Market pricing swings back to quarter-point Fed rate hike
▼ + stars: | 2023-03-10 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

A trader works on the floor during morning trading at the New York Stock Exchange (NYSE) on March 10, 2023 in New York City. "In all, the data do not argue for a 50 [basis point] rate hike by the Fed on March 22 despite the strong payroll advance," said Kathy Bostjancic, chief economist at Nationwide. "The Fed can take comfort in the rise in the supply of labor and the easing of upward pressure on wages to maintain a 25 [basis point] rate increase," Bostjancic added. A basis point is 0.01 percentage point. "The move down on 50 basis point odds was hard to separate from the collapse of SVB," said Liz Ann Sonders, chief investment strategist at Charles Schwab.

☆ The week in inflation: Data signals higher prices, possibly more aggressive Fed
▼ + stars: | 2023-02-17 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

A week's worth of surprising economic data sent a pretty strong message to the market: Inflation that is higher than anticipated is likely to translate into higher interest rates as well. "We are listening to the signal from January inflation data, which suggest the disinflation process may be more prolonged than we previously believed," wrote Michael Gapen, chief U.S. economist at Bank of America. The data surprises began two weeks ago when nonfarm payrolls surged by a stunning 517,000 in January , raising concerns that a resilient labor market could drive wages, and inflation, higher. The consumer price index , a closely watched inflation metric, jumped 0.5% in January, a bit more than expected. Futures pricing points to a peak, or "terminal," rate of 5.23%, according to the August 2023 fed funds futures contract.

☆ Bank of America's Michael Gapen cautions against reading into recession indicators
▼ + stars: | 2023-02-09 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailBank of America's Michael Gapen cautions against reading into recession indicatorsMichael Gapen, head of Bank of America's global research, joins 'Closing Bell' to discuss CPI headline rates moving up with increasing gas prices, passing peak inflation and the potential need for softness in labor market conditions.

☆ Markets may be taking the wrong read from January's shocking jobs report
▼ + stars: | 2023-02-06 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

"The resounding strength of January employment report does not change our view of the labor market. Significant imbalances remain in the labor market due to too much excess demand and limited labor market slack," added Michael Gapen, chief U.S. economist at Bank of America. That's because they see the jobs report gain of 517,000 as a potential impetus to push the Fed into more aggressive interest rate hikes. He thinks future months will show a slowing labor market that will force the Fed into halting its hikes. "From a data-dependency perspective, the strength of the labor market suggests there might be need to continue to raise interest rates."

☆ GDP report could show solid fourth-quarter growth but still signal a recession is coming, economists say
▼ + stars: | 2023-01-25 | by ( Patti Domm | In | ) www.cnbc.com time to read: +5 min

Economic growth is expected to have slowed slightly in the fourth quarter but was still solid, driven by a strong consumer. According to Dow Jones, economists expect that U.S. gross domestic product grew by 2.8% in the fourth quarter, down from the 3.2% pace in the third quarter. While economists see a strong fourth quarter, they are divided on where the economy goes from here and a key is the consumer. The slowdown in residential investment has taken a full percentage point off of growth in the fourth quarter, he said. Some market strategists see a strong fourth quarter as another sign the economy could avoid falling into recession, and a better-than-expected report could reinforce that view.

☆ Important inflation data and big bank earnings could create volatility for markets in week ahead
▼ + stars: | 2023-01-06 | by ( Patti Domm | In | ) www.cnbc.com time to read: +6 min

Other speakers include Atlanta Fed President Raphael Bostic Monday. On Thursday, Philadelphia Fed President Patrick Harker, Richmond Fed President Tom Barkin and St. Louis Fed President Bullard all speak at separate events. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins have appearances Friday. The most important inflation report in the week ahead is the consumer price index, released Thursday. Import prices 10:00 a.m. Consumer sentiment 10:00 a.m. Minneapolis Fed President Neel Kashkari 10:20 a.m. Philadelphia Fed's Harker 9:00 a.m. Boston Fed President Susan Collins

☆ December's jobs report fuels optimism that the economy could still pull off a soft landing
▼ + stars: | 2023-01-06 | by ( Patti Domm | In | ) www.cnbc.com time to read: +4 min

Mike Blake | ReutersDecember's strong job growth combined with slowing wage inflation is fueling optimism that the economy might just see a soft landing. According to the Bureau of Labor Statistics, the economy added 223,000 jobs in the final month of 2022, less than the 256,000 in November. Mark Zandi, chief economist at Moody's Analytics, said the report is encouraging and confirms his expectation that there will be a soft landing for the economy. While many economists expect a recession, Zandi points to strong growth even with a slowdown in the housing sector. Zandi notes wage growth is a full percentage point slower than when it peaked in the spring.

☆ Job growth expected to have cooled in December but not enough to slow Fed rate hikes
▼ + stars: | 2023-01-05 | by ( Patti Domm | In | ) www.cnbc.com time to read: +6 min

The data is important since the Fed has been trying to slow the hot labor market in its fight against inflation. Economists surveyed by Dow Jones also expect that the unemployment rate remained at 3.7% in December, while average hourly wage growth slowed to 0.4% from 0.6% in November. "Their forecast has the unemployment rate rising. "If you need the unemployment rate to rise, you need jobs to fall below 70,000 to 100,000." The Fed has raised interest rates seven times since last March, and the fed funds rate is now at 4.25% to 4.5%.

☆ Bank of America says the US economy is hurtling toward a recession. Their stock chief shares her 5-part investing playbook for thriving during the downturn.
▼ + stars: | 2022-11-30 | by ( William Edwards | ) www.businessinsider.com time to read: +4 min

Bank of America economists say a mild recession is coming in 1H 2023. In a webinar on Monday, the bank's stock chief Savita Subramanian shared her playbook. First, Subramanian said she likes sectors of the market that offer free-cash-flow yields, growing income streams, and protection from inflation. Next, Subramanian likes two sectors that are more traditional recession plays: consumer staples and utilities. For consumer staples, she said she would start moving out of the sector once the economy shows clear signs of a recovery.

☆ Why technology spending will rise even as tech stocks tank and layoffs mount
▼ + stars: | 2022-11-07 | by ( Tim Mullaney | ) www.cnbc.com time to read: +6 min

The path of tech demand has been one of the key questions as markets try to handicap the odds of a 2023 recession. "CEOs and CFOs have no intention of cutting tech spending," said Gartner chief forecaster John-David Lovelock. On the bright side, the GDP report painted a picture of fairly strong technology demand, said Bank of America Merrill Lynch economist Michael Gapen. The shortfall in investment spending was driven by a sharp decline in residential investment, he said. In percentage terms, cloud spending will rise by about 20 percent for the next two to three years, according to Gartner's forecast.

☆ Fed rate hikes could go even further than expected as Powell commits to stomp out inflation
▼ + stars: | 2022-11-02 | by ( Patti Domm | In | ) www.cnbc.com time to read: +4 min

The Fed raised its target fed funds rate Wednesday by 75 basis points, or three-quarters of a point, and said it would take into account the lagging impact of higher rates on the economy. In the futures market, traders bet the terminal rate for fed funds would reach 5.09% by May from just over 5% before the meeting. The terminal rate is the level at which the Fed is expected to stop raising interest rates. With Wednesday's hike, the fed funds target rate range is now 3.75% to 4%. Caron said the market is now projecting a rate above the Fed's median target for the terminal rate.

☆ The Fed is expected to raise interest rates by three-quarters of a point and then signal it could slow the pace
▼ + stars: | 2022-11-01 | by ( Patti Domm | In | ) www.cnbc.com time to read: +5 min

The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point Wednesday and then signal that it could reduce the size of its rate hikes starting as soon as December. Markets are primed for the fourth 75-basis point hike in a row, and investors are anticipating the Fed will slow down its pace before winding down the rate-hiking cycle in March. Gapen said he expects Fed Chair Jerome Powell to indicate during his press briefing that the Fed discussed slowing the pace of rate hikes but did not commit to it. He expects the Fed would then raise interest rates by a half percentage point in December. The stock market has already rallied on expectations of a slowdown in rate hikes by the Fed, after a final 75 basis point hike Wednesday afternoon.

☆ The US economy came back to life this summer, but things are still likely to suck next year
▼ + stars: | 2022-10-28 | by ( Juliana Kaplan | Madison Hoff | ) www.businessinsider.com time to read: +8 min

Mike Schenk, chief economist of Credit Union National Association, said in a statement that the "healthy economic growth will not last." CEOs are pessimistic about the future and the hot labor market is coolingCEOs, for one, aren't feeling too good about the economy. "The labor market continues to be hot, even if it's cooled a little bit since the beginning of this year," Bunker told Insider. "Where we're seeing it does signal that it is sectors normalizing, rather than dramatically pulling back postings because they are concerned about short term economic growth." He noted that excess labor demand "gives you a lot of running room here before the labor market actually gets soft."

☆ Soaring rent, food costs keep U.S. inflation on front burner; labor market tight
▼ + stars: | 2022-10-13 | by ( Lucia Mutikani | ) www.reuters.com time to read: +7 min

Food prices increased 0.8%, with the cost of food at home advancing 0.7% amid rises in all six major grocery store food groups. The war in Ukraine also poses an upside risk to food prices. In the 12 months through September, the CPI increased 8.2% after rising 8.3% in August, decelerating for a third straight month. The so-called core CPI is being largely driven by the higher costs for rental accommodation. The core CPI jumped 6.6% in the 12 months through September, the most since August 1982, after rising 6.3% in August.

☆ Bank of America forecasts exactly how many jobs will be lost as the US economy takes a downturn — and how quickly
▼ + stars: | 2022-10-13 | by ( Jacob Zinkula | ) www.businessinsider.com time to read: +3 min

Bank of America is projecting that the US economy will lose over 500,000 jobs in 2023. The bank expects the unemployment rate to reach 5.5%. If this does come to pass, the US economy could have thousands of fewer jobs, Bank of America told clients in a report last Friday. In March and April of 2020, the US lost 1,500 and 20,000 jobs, leading to an unemployment rate of nearly 15% — nearly three-times as high as what Bank of America is projecting this go-round. But perhaps counterintuitively, today's strong job market could actually be a bad sign for its health in the future, some experts say.

☆ Consumer inflation expected to have run hot in September, boosted by rent
▼ + stars: | 2022-10-12 | by ( Patti Domm | In | ) www.cnbc.com time to read: +3 min

Stoked by rising rent costs, consumer inflation is expected to have remained hot in September but slightly lower than August's pace. Economists expect the consumer price index rose 0.3% in September, up from 0.1% in August, according to Dow Jones. "The core inflation is going to be higher so it's still an inflation that hasn't peaked yet in many ways. Economists expect that services inflation continued to run hot in September, due to rising wages and labor shortages. "We expect shelter inflation to slow to a 0.4-0.5% monthly pace by year-end and peak at around 7% year-over-year early next year."

☆ US economy will soon start losing 175,000 jobs a month, Bank of America warns
▼ + stars: | 2022-10-10 | by ( Matt Egan | ) edition.cnn.com time to read: +3 min

New York CNN Business —The Federal Reserve’s fight to squash inflation will cause the US economy to start losing tens of thousands of jobs a month beginning early next year, Bank of America warns. ‘Mild’ recessionSome forecasters are more bullish on the state of the jobs market. The Conference Board said Monday its employment trend index, a combination of leading job market indicators, ticked up last month. Bank of America expects the unemployment rate will top out at 5.5% next year, well below the peak of nearly 15% in April 2020. “Although nobody wants to be callous about someone losing their job,” Gapen said, “this could be classified as a mild recession.”

☆ Fed to take rates higher than previously expected; more pain ahead
▼ + stars: | 2022-09-28 | by ( Indradip Ghosh | ) www.reuters.com time to read: +4 min

But that is unlikely to push the Fed to switch its policy path anytime soon as Fed Chair Jerome Powell and other policymakers have remained blunt about the “pain” to come. The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%. The real policy mistake is not bringing inflation back down to 2%,” said Michael Gapen, chief U.S. economist at BofA Securities. All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected. “The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved.”(For other stories from the Reuters global economic poll:)

☆ Fed to take rates higher than previously expected; more pain ahead - Reuters poll
▼ + stars: | 2022-09-28 | by ( Indradip Ghosh | ) www.reuters.com time to read: +4 min

☆ Fed to take rates higher than previously expected; more pain ahead: Reuters Poll
▼ + stars: | 2022-09-28 | by ( Indradip Ghosh | ) www.reuters.com time to read: +4 min

The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%. All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected. "The short-run pain of recession would be better than the long-run pain of inflation expectations becoming unanchored." Also, unlike most major central banks, the Fed has backing from a strong currency and a relatively strong economy compared with its peers. "The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved."

☆ '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.

☆ Fed expected to hike rates by three-quarters of a point again, but its forecast may matter most
▼ + stars: | 2022-09-20 | by ( Patti Domm | In | ) www.cnbc.com time to read: +6 min

The Fed is expected to fire off another three-quarter point rate hike — its third in a row. We had theoretical road maps up until now, but from the Fed's point of view they're crossing into a world of tightening. Neutral is considered to be the interest rate level where Fed policy is no longer easy, but not yet restrictive. The Fed has considered 2.5% to be neutral, and if it raises by three-quarters of a point, fed funds will be in a range of 3% to 3.25%. In June, the Fed forecast the unemployment rate would be 3.7% this year, the same level it was at in August.

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