Fed

Powell Says Economy Is Normalizing & September Rate Cut Is On The Table

Jul 31, 2024 3 min read paid

The Federal Open Market Committee (FOMC) left the federal funds rate (FFR) unchanged between 5.25%-5.50% at today's meeting, as expected. Fed Chair Jerome Powell did signal that a 25bps rate cut is highly likely at the September meeting now that the labor market is "normalizing" and inflation is cooling. The 2-year and 10-year US Treasury yields slid by about 6 basis points during

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: July 29-Aug 2

Jul 28, 2024 2 min read paid

The week ahead is packed with economic indicators, but all eyes will be on the Fed's interest rate decision on Wednesday and payroll employment on Friday. We don't expect the Fed will alter the stance of monetary policy at the July meeting, but Fed Chair Jerome Powell could signal that a September cut to the federal funds rate (FFR) is likely. That's because as

Ed Yardeni
Eric Wallerstein

Fed Put Jolts Stocks To New Record High

Jul 2, 2024 2 min read paid

The S&P 500 jumped to a new record high of 5509 today on better-than-expected Tesla vehicle deliveries. In addition, today’s JOLTS report showed more job openings. Nevertheless, two Fed officials suggested today that the Fed Put is back because they are worried that the Fed might cause job losses if monetary policy stays too tight for too long. Their dovish comments reinforced expectations that the Fed will

Ed Yardeni
Eric Wallerstein

Rate Cuts This Year Unlikely As Fed Gets Closer To 2.0% Target

Jun 26, 2024 3 min read paid

We still expect that the Fed's preferred core PCED inflation measure will fall to the Fed's 2.0% target by the end of this year (chart). It was already down to 2.8% y/y in April. May's number will be released on Friday, and should show further progress. We don't see the Fed cutting the federal funds rate (FFR) this year,

Ed Yardeni
Eric Wallerstein

Inflation Moderates & Stocks Soar As Fed Aims For One Rate Cut In 2024

Jun 12, 2024 2 min read paid

Hooray! The S&P 500 closed slightly above our yearend target of 5400 today (chart). The same thing happened to us last year: We were forecasting 4600 by the end of 2024 and got there by mid-year. The index closed around 4800 at the end of last year. So what do we do now? We’ll talk and write more about our 2025 and 2026 targets of 6000 and

Ed Yardeni

Charging to New Highs

Jun 5, 2024 3 min read paid

The S&P 500 rose to yet another record high today, once again led by semiconductor stocks, in particular, by Nvidia (chart). The chipmaker just joined the $3 trillion dollar market-cap club along with Microsoft and Apple. The long line to buy the company's GPU chips keeps getting longer. It will have a 10-for-1 stock split on Friday. Perversely, the bulls are also charged up by the

Ed Yardeni
Eric Wallerstein

Is The Fed Put Back?

Jun 4, 2024 3 min read paid

The financial markets seem to believe that the Fed Put is back. The recent batch of weaker-than-expected economic indicators raised the number of expected 25bps cuts in the federal funds rate (FFR) from 2 to 3 over the next 12 months (chart). That's according to the basis-point spread between the 12-month FFR futures and the actual FFR divided by 25bps. Investors must be confident that inflation is getting

Ed Yardeni
Eric Wallerstein

Market Call: Another Rollercoaster Ride.

Jun 2, 2024 3 min read paid

Friday was another wild ride on the S&P 500 rollercoaster. At first, stock prices rose after April's PCED inflation rate released at 8:30 am matched expectations. But then they dropped after a recessionary reading in May's Chicago Purchasing Managers Business Barometer at 10:00 am (chart). The unexpected decrease in the business barometer partly reflected a steep drop in the new orders index,

Ed Yardeni

Bonds Weighing On Stocks

May 29, 2024 2 min read paid

Yesterday, Minneapolis Fed President Neel Kashkari told CNBC that he wants to see "many more months of positive inflation data" before he's ready to cut rates. He also didn't rule out a hike. Fixed-income investors are starting to realize that this is the new party line from the Fed. Earlier this year, we argued that there was no reason for the Fed to rush

Ed Yardeni
Eric Wallerstein

Will Nvidia Trump The Fed?

May 23, 2024 2 min read paid

Yesterday's FOMC minutes confirmed that Fed officials are in no rush to lower the federal funds rate (FFR) and some are considering the possibility that they might have to raise it if inflation stalls above the Fed's 2.0% target. The 2-year Treasury yield is back up to 4.94% implying one 25bps rate cut over the next 12 months. So stocks sold off on fears

Ed Yardeni
Eric Wallerstein

The Recession Claim

May 9, 2024 2 min read

One of our competitors claims that we are in a recession. Another claims that we will soon be in a recession. The most widely anticipated recession of all times is turning into the longest widely anticipated recession of all times. One day, the diehard hard-landers will be right. Was today the day? We're sure that their heartbeats quickened on today's jobless claims report. Consider the following:

Ed Yardeni
Eric Wallerstein

Powell Says No Stag, No Flation.

May 1, 2024 2 min read paid

Fed Chair Jerome Powell wasn't dovish at his presser today. But he wasn't hawkish either. He said, "I think it's unlikely that the next policy rate move will be a hike." The 2-year Treasury yield fell back below 5.00% to 4.98%, consistent with one 25bps cut in the federal funds rate over the next twelve months. The S&P

Ed Yardeni

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