All eyes on Fed as stock market pines for rate cut

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All eyes on Fed as stock market pines for rate cut GlobeInvestor

A trader works on the trading floor on the morning of the IPO for Chewy Inc. at the New York Stock Exchange in New York City, U.S., June 14.The Federal Open Market Committee meeting next week is shaping up as a pivotal one for Wall Street, with stocks primed for a selloff should the Fed fail to take an even more dovish tilt after policymakers raised expectations for a rate cut in recent weeks.

Bank of America Merrill Lynch Chief Economist Michelle Meyer expects the Fed’s “dot plots” projection of interest rates, which represents the anonymous, individual rate projections of Fed policymakers for the next few years, to shift lower as officials start to factor in cuts. However, “the median dot will signal a Fed on hold,” Meyer said in a note.

In a recent note to clients, Goldman Sachs economist Jan Hatzius said one of the themes from recent Fed commentary is that there is a wide range of views from central bank officials, although most “indicated trade policy increased downside risks by increasing uncertainty” and the result of ongoing trade negotiations was highly uncertain.

Economic data this week was a mixed bag, with retail sales topping expectations and halting a tide of weak indicators, including the payrolls report and readings on inflation in the form of May consumer and producer prices with implications for core personal consumption expenditures, the Fed’s favorite inflation measure.

 

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globeinvestor They are contemplating a rate cut with a US GDP of 3.2% and Canada’s under Trudeau was 0.4% and we aren’t cutting our rate? How stupid can Canadians be to not question the obvious economic decline Canada is in and the denial of it in Ottawa

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