Only one regional bank – the New York Fed – reported a significant decline in activity. economic activity either slight increased or slight declined over the past six weeks. The Federal Reserve’s latest Beige Book indicated that U.S. And I think the Fed’s going to pause maybe at the end of the first quarter, and I think there’s a chance that they could even lower rates by the end of the year,” Lee told MarketWatch via phone. I think they are going to come down faster than what the majority is predicting. “I think inflation is actually better than what the numbers show. Mester is among the more consistently hawkish members of the central bank’s 19-person interest-rate-setting committee. Meanwhile, Loretta Mester, president of the Fed’s Bank of Cleveland, acknowledged that the economy is beginning to see “the kind of actions that we need to see,” but further rate hikes are still needed. Louis Fed President James Bullard said that the Federal Reserve should not “stall” on raising its benchmark rates until they are above 5%. “But I think the trend now is shifting from being so negative to getting closer to more neutral.”įed officials on Wednesday reiterated their determination to bring inflation down through more interest rate hikes. “The sentiment is still negative, and I think today is just about some profit-taking of a pretty strong few weeks to start the year, because you’ve got a nice little run,” said Jimmy Lee, founder and CEO of Wealth Consulting Group. The S&P 500 index is up 2.3% so far this year on hopes easing inflation will allow the Federal Reserve to be less aggressive in its monetary tightening cycle, making an economic hard landing less likely and thus supporting company earnings. stocks traded modestly higher on Wednesday morning, later losing momentum to trade deep in the red as the positive start to the new year started to show signs of fading. See: Wall Street’s ‘fear gauge’ flashes warning that stocks might be headed off a cliff “September’s rise (in federal funds rate) is now beginning to show up and then you’ll begin to see a November’s rise show up over the next couple of months,” Pence told MarketWatch in a phone interview. “The weak retail sales report does not change expectations that the Fed will likely increase rates by 0.25% during the upcoming meeting.”ĭryden Pence, chief investment officer at Pence Capital Management said the economy is seeing the continued effect of the rise in the federal funds rate. Declining consumer demand and periodic discounting for some goods pushed down control-group sales, the category that directly feeds into the official GDP estimate,” wrote Jeffrey Roach, Chief Economist for LPL Financial, in emailed comments. “Weak retail sales in December shows consumers are likely retrenching during a time of economic uncertainty. economic data, the industrial production fell 0.7% in December in the biggest monthly decline since September 2021. Retail sales are a big part of consumer spending and could offer clues about the strength of the economy. Economists polled by the Wall Street Journal forecasted a decline of 1%. However, December retail sales dropped 1.1%, contracting for the second month in a row. economic data on Wednesday showed that wholesale prices slid 0.5% in December, the biggest decline since April 2020, when the coronavirus pandemic began, adding to evidence that inflation, though still high, has started to ease.
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