Wall Street major indices closed firmly higher on Wednesday, driven by a tech rally led by AI-darling Nvidia, amid optimism that the Federal Reserve might lower interest rates later this year after slightly weak labor market data.
I guess the question remains, is inflation truly beaten. I know many are certain, but I do not see it, and I fear that even the Europeans will find that "the last mile" to 2% is going to be very tough. I continue to believe that they will simply ignore inflation and let it run hot in order to cut rates, but I do believe the Fed will cut at least once this year.
I guess the question remains, is inflation truly beaten. I know many are certain, but I do not see it, and I fear that even the Europeans will find that "the last mile" to 2% is going to be very tough. I continue to believe that they will simply ignore inflation and let it run hot in order to cut rates, but I do believe the Fed will cut at least once this year.
A rate cut this year certainly seems likely, although I suspect it'll come after the U.S. election.
Agree on higher inflation and if I was to "predict" on where it'll all settle;
1. The FED will eventually set its rate at inflation +50bp, or 2.50%
2. The 2yr rate will settle in at Fed Funds +50bp, or 3.00%
3. The 10yr rate will settle in at the 2yr +100bp, or 4.00%
I guess I’m just suspect they get back to 2% at all. Maybe raise all your numbers by 50-75bps as 2.5% - 3.0% will be the effective target