Editor
Signs of slowing inflation boost hopes for interest rate hikes on Wall Street.
Wall Street trade was mixed in this week’s final session, despite the strong inflation indication. The decline can be explained by the expectation that the Fed’s next meeting will have a hawkish tone. The technology sector hasn’t received this expectation well. The tech-heavy composite Nasdaq was down by 0.12% to 16.680.40 basis points. The S&P 500 benchmark and the Dow futures, on the other hand, scored high gains. The broad index of the S&P 500 rose by 0.07% to 5,300.90 basis points, and the Dow rose by 0.22% to 39.965.00 basis points.
while the debate has become heated in terms of interest rate levels, with the potential of raising interest rates. Overall, at the last FOMC meeting, rates were kept unchanged, and Powell indicated that a rate hike was unlikely. Still, with the latest inflation data, labor data, and earnings data remaining in focus, the odds of changing them are high. Therefore, despite Powlle’s comment, economists are concerned about the adequacy of current policies amidst potential disinflation stalling. BofA shared his comment in a note and said, “The minutes from the May FOMC meeting should sound more hawkish on the margin than Chair Powell’s press conference.”. Additionally, BofA rejects stagflation concerns, attributing service inflation to robust demand. Currently, market experts have split opinions about the Fed’s next interest rates. The profits are split equally, with 50% seeing the first interest rate cut later in September, which makes cutting interest by June impossible for now. April data suggests that inflation is slowing while the labor market is still recovering slowly and is still in the path of a full recovery. However, the unemployment rate remains the same with slight increases, which makes the Fed officially choose the more cautious path to keep the economy rolling for now.
Fed Gov. Bowman shreds a note and says, “While the current stance of monetary policy appears to be at a restrictive level, I remain willing to raise the target range for the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed.” That said, it is clear that Bowman supports interest rate hikes only when disinflation stalls.
Meanwhile, in the bond market, market uncertainty has added some value to Treasury yield rates. The 10-year Treasury yields climbed by 1.12% to 4,424%. The fixed 3-year mortgage rates rose by 0.94% to 4,561. As for the five years and the two months, they both scored an average increase between 0.5% and 1.20%.
In other economic news, IL prices climbed high this weekend session. The sluggish inflation date has boosted interest rates, cut hope, and, in turn, foiled oil prices this Friday. The oil market heads to a win session this week with the West Texas intermediate climbing by 0.99% to $80 per barrel this Friday. Brent crude oil was up by 0.82% to $83.90 per barrel. In terms of weekly gains, both indexes have scored gains between 0.9% and 1.1%.
