(Bloomberg) — Stocks and bonds trade volatile on Wall Street as better-than-expected inflation data dampened bets that the U.S. Federal Reserve will cut interest rates in March. It was observed.
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Across trading desks, the prevailing view is that although the consumer price index did not perform that well, expectations for the Fed’s policy did not change significantly. In other words, investors are almost certain that officials will finish raising rates and ease policy in 2024 — even if that happens a little later than markets are pricing in.
“The so-called ‘last mile’ takes longer to reach the end goal,” said Quincy Crosby of LPL Financial. “Today’s CPI report suggests the Fed’s first rate cut may be delayed longer than the market expects.”
The S&P 500 index has fluctuated between gains and losses. The yield on the US 10-year bond is hovering around 4%. Fed swaps factor in a reduction in monetary easing in 2024. The first exchange-traded fund (ETF) in the U.S. that invests directly in Bitcoin began trading, with Bitcoin paring its gains after reaching $49,000. Oil prices rose after Iran seized a tanker in the Gulf of Oman.
Cleveland Fed President Loretta Mester said March is probably too early to cut rates. Richmond’s Thomas Barkin reiterated that he was still looking for further evidence that inflation was on target.
There are no particular problems with the latest inflation data, aside from the fact that it still suggests CPI will remain “sticky” above the 3% level, according to Michael Shaul of Marketfield Asset Management. It is said that there is no point. This does not suggest that a rapid wave of rate cuts is about to occur, he noted.
“Today’s inflation report confirms the view that the market was a little too excited about the timing of the rate cut,” said Seema Shah, Principal Asset Management. “These are not bad numbers, but they do show that disinflation is still slow and unlikely to fall to 2% in a straight line.”
Perhaps the market was too enthusiastic about its initial predictions, but the stars should eventually align for the Fed to cut rates — likely around the middle of this year, he added.
“The most important thing for investors is for the Fed to finish raising interest rates (and this report doesn’t change that at all),” said Chris Zaccarelli of the Independent Advisor Alliance. “So it shouldn’t really matter whether you cut in March or June, or whether there are only four cuts or three cuts or two cuts.”
TradeStation’s David Russell said the inflation numbers are disappointing for bulls, but may not have the biggest impact as attention quickly shifts to quarterly results.
“Very few things move in a straight line in the stock market or in the economy,” he said. “It’s not good news for stocks, but it may not be fatal either.”
Company highlights:
JPMorgan Chase & Co., Bank of America, Citigroup and Wells Fargo ended their U.S. corporate reporting cycles on Friday after U.S. bank stocks rose 23% last quarter, overwhelming the broader market. It started.
The Federal Aviation Administration has launched a formal investigation into Boeing Co. after one of its planes crashed last week, widening an unfolding trust crisis at the U.S. aircraft maker.
The U.S. national security review of Nippon Steel’s acquisition of U.S. Steel is unlikely to conclude until later this year and has been extended to 2025, a much longer period than both companies have publicly indicated, according to people familiar with the matter. There is a possibility that
Chesapeake Energy Co. has agreed to buy rival Southwestern Energy Co. for about $7.4 billion in an all-stock deal to create the largest natural gas producer in the United States.
Hertz Global Holdings Inc. plans to sell a third of its U.S. electric vehicle fleet and reinvest in gas-powered vehicles due to weak demand and high repair costs for battery-powered options.
Airbus SE set a sales record in 2023 with net orders of more than 2,000 planes as airlines poured into purchases as demand for fuel-efficient aircraft soared post-pandemic.
Grifols SA CEO Thomas Glanzmann failed to allay investors’ concerns about serious short-selling reports during an investor conference call on Thursday, sending the stock plummeting again.
This week’s main events:
China CPI, PPI, Trade, Friday
UK industrial production, Friday
US PPI, Friday
Some of the largest U.S. banks will release fourth-quarter financial results on Friday.
Minneapolis Fed President Neel Kashkari speaks on Friday
ECB Chief Economist Philip Lane speaks on Friday
The main movements in the market are:
stock
The S&P 500 was little changed as of 4 p.m. New York time.
Nasdaq 100 rose 0.2%
The Dow Jones Industrial Average is little changed.
MSCI World Index little changed
currency
The Bloomberg Dollar Spot Index fell 0.1%.
The euro was almost unchanged at $1.0971.
Sterling rose 0.1% to $1.2760.
The Japanese yen rose 0.2% to 145.41 yen to the dollar.
cryptocurrency
Bitcoin rose 0.7% to $46,249.78
Ether rose 2.6% to $2,593.58
bond
The 10-year Treasury yield fell 5 basis points to 3.98%.
Germany’s 10-year bond yield rose 2 basis points to 2.24%.
The UK 10-year bond yield rose 2 basis points to 3.84%.
merchandise
West Texas Intermediate crude rose 1.5% to $72.41 per barrel.
Spot gold rose 0.2% to $2,027.58 an ounce.
This article was produced in partnership with Bloomberg Automation.
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