Fed stress test finds all 22 banks tested remained above minimum capital requirements
CNBC's Leslie Picker joins 'Closing Bell Overtime' with the results of the Federal Reserve's stress test.
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Yahoo
an hour ago
- Yahoo
Markets are gearing up for rate cuts. Morgan Stanley thinks investors will be disappointed.
Markets have been clamoring for rate cuts, and are eyeing the next two Fed meetings as possible windows. But Morgan Stanley analysts predict that the Fed won't be cutting rates in July or September. The market's view of rate cuts has brightened after recent dovish commentary. Economists at Morgan Stanley think investors are about to be disappointed in the outcomes of the next two Federal Reserve meetings. The bank said in a note on Friday that, despite a recent push from President Donald Trump and recent dovish talk from central bankers, the July and September FOMC meetings will result in no change to borrowing costs. The Fed's cautious approach this year has sparked backlash from President Trump, who has said he believes interest rates need to be cut "by at least 2-3 points." But since the last meeting, other top Fed officials have come out in support of rate cuts in July, with markets cheering the dovish talk. But Morgan Stanley says don't count on it. Their thesis centers around two key points. First, they expect that the economic data released in the short term will remain consistent with the "wait and see approach" displayed by Powell. While the Fed chairman has reaffirmed a need to further assess the impact of tariffs, he has also recently raised concerns regarding the reliability of economic data. "We expect firmer inflation prints showing more signs of a tariff push over the summer," the analysts note, adding that they also expect the coming employment report to be "relatively solid," both of which are factors unlikely to push the Fed toward rate cuts. They also highlight that despite the recent push from Fed governors Christopher Waller and Michelle Bowman, the pro-rate-cut camp is relatively small. "The Summary of Economic Projections (SEP) published last week revealed that there are seven policymakers who expect no cuts this year," the report states. "In fact, the overall tone of Fed speakers this week was much more aligned with Chair Powell's." San Francisco Fed president Mary Daly and New York Fed president John Williams are examples of Fed officials who have taken a more hawkish approach to interest rates. Both have expressed sentiments similar to Powell's. Morgan Stanley added that both Waller and Bowman's statements raised the probability of rate cuts to 20% in July and 60%-90% in September. The higher odds were cheered by markets during the week, with more dovish forecasts helping propel the S&P 500 to a new all-time high. While Morgan Stanley's analysts note uncertainty remains high and that their predictions could be wrong, they maintain that firmer inflation prints will be coming later in the summer and will likely peak in July or August. They add that their forecast is aligned with Powell's expectations, which include tariffs pushing prices higher in the coming months. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Yahoo
How the Fed's July rate cut decision impacts American wallets
Federal Reserve officials are expressing mixed sentiment about whether to cut interest rates or hold them steady in the July FOMC meeting. Wealth Alliance CEO Rob Conzo joins Mind Your Money with Brad Smith to discuss how either outcome would impact Americans' everyday finances. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. Well, Federal Reserve officials are split on whether an interest rate cut in July is on the table, depending on whether the FOMC holds rates steady or reduces the benchmark rate. What does that outcome mean for your everyday finances? Here to explain and discuss further, we've got Rob Conzo, who is the Wealth Alliance CEO. Rob, good to have you here with us. How does the Fed's benchmark rate affect people's personal finances? Great to be with you, Brad. Um, it's a very misunderstood rate. It's the rate, the rate that banks charge each other to borrow money, but how does that affect you personally? Well, first thing it affects you either way. Number one on the expense side, meaning borrowing. So we all know that, right? We have mortgages, and credit cards, and auto loans, and student loans, and, and small business loans. So when the Fed sets a rate, right now it's between four and a quarter and four and a half, well, then all the banks look at that rate and decide where they're going to charge you for the debt side of it, your expense. And let's not forget half of the American economy is small business. So when they have to pay more for lines of credit loans, well, it hurts them, they hire less, and it's a problem for the economy. That's why everybody wants the Fed to lower rates. So Rob, let's get specific. How are mortgage rates impacted by the Fed's next move? And what does and does a cut mean that we could see lower mortgage rates as well? Yeah. So the longer you go out with lending, the longer other factors are involved. I'll give you an example. Let's talk about money markets. That's money you're earning. Well, that's every single day, and all it matters is what the Fed's going to charge, and what the bank wants to make. And there's a rate, a mortgage, money expense, you're spending. Well, that's different. Now suddenly the bank goes, alright, let's see what the Fed is going to charge. Four, four and a quarter. Okay. Now, you want to get a mortgage. So the Fed rate is one aspect. Uh, how much of a mortgage is a second. How long are you going out? What's your salary? How the house is valued at. So the longer the debt, the more Fed rates, uh, the more your personal stuff gets involved and muddies the water between just the Fed rate. So the Fed rate is just a little part of it when you're going out longer. You know, while we have you here now, let's go to credit cards. Say, you know, maybe not me, but somebody I know has a lot of debt, debt and, and uh, racked up here. Will a lower benchmark rate from the Fed mean that I have to pay less interest perhaps? Great question. The credit card one is the one that's a little unique in the sense that credit card companies charge upwards of 15, 20, 25% in interest. And you're saying to yourself, well, how could it be so high? And it's so high because credit card companies want to make a lot of money. So at the end of the day, there's so much leeway in the credit card company. You would think if the Fed lowered rates, you would see credit card rates come in as well. That may not be the case. Some credit card companies just hold it steady and it is what it is. I'll tell you, give you another example. Sometimes, forget credit cards, again, when you had a bank savings account, and you're getting very, very little interest rate, but yet the Fed's rates at 4 and a quarter, 450. Why is that the case? The bank has the right to say, look, we're only going to give you 0.2%. Meanwhile, another brokerage account could give you 4% on a money market. So there is business parts of what the interest rate you pay or you receive on top of the Fed rate mandated. What about savings vehicles like CDs, certificates of deposit? How are they impacted depending upon the Fed's decision? So CDs, saving vehicles of all sorts, money markets is a is a standard one. Bank savings accounts, people know. Again, there's two aspects of it. Fed, surely, if the Fed raises rates like they have, well, then you're going to typically get more in bank savings accounts and CDs. And we've seen that, people getting 5% CDs. The Fed starts lowering rates, if they do, and we don't think they're going to be doing that this July, but good chance they could be doing that in September, the Fed starts lowering rates, you'll see those CD rates and savings rates come in. And that's why a lot of financial advisors are saying, hey, you may want to lock in a longer rate now while it's still high before the Fed cuts. And finally, while we have you here, Rob, when the Fed finally cuts interest rates, should you adjust your, yeah. Should you adjust your financial plans, things like your budget or borrowing or, should you just stay the course? Now, um, it's a very good question. And it it depends really. A lot of answers to financial questions are, it depends, unfortunately. But the real answer is when the Fed starts cutting rates, if it's just very, very minimal, a quarter of a point, um, that's not going to make a big difference on things. But as things start to go down further, if they do, well, then you want to start preparing for that now. You want to get your financial plan in order, understand how long your debt is going out. Are they credit cards with really high interest rates? And on the income side, on my income vehicles, bonds, CDs, savings accounts, giving me the interest that I need to make my retirement and financial goals. Rob, thanks so much for taking the time here. We're going to be watching closely as we know that you will be too for when they do start to cut interest rates. Thanks so much. Alright. Thank you.
Forbes
2 hours ago
- Forbes
Even More Bad News For Younger Workers: More Unemployment, Less Money
unemployment line, people out of work looking for a job A few days ago, I wrote about 10 college degrees with high unemployment for the recently graduated (ages 22 to 27). The data, presented by the Federal Reserve Bank of New York, was from 2023 when the unemployment rate was 3.8% and some of the highest rates of unemployment were among people with STEM (science, technology, engineering, and math) degrees. Some of the examples that had upwards of double the overall unemployment rate were physics (7.8%), computer engineering (7.5%), computer science (6.1%), chemistry (6.1%), and information systems and management (5.6%). As they grow up, young adults repeatedly hear that these 'safe' studies lead to plentiful, good-paying employment. What they don't hear — although likely have a growing sense of given common comments on social media — is the truth of their being fed with a load of bunk. There's more truth in additional New York Fed data about how 22-to-27-year-olds are faring. Start with the distribution of annual wages for recent college graduates. This data runs from 1990 through 2024 and is in the form of constant dollars to allow for a direct comparison that accounts for inflation. The graph below shows the data. The grey shaded area shows the 25th to 75th percentile around the bachelor's degree median. Changes in incomes of people 22 to 27 In 1990, those with a bachelor's degree had a median wage of $56,642. The 25th percentile made $43,216 and the 75th percentile wage was $72,027. The high school diploma only median wage was $40,815. Jump to 2024. The bachelor's degree median wage was $60,000, with a 25th percentile of $43,000 and a 75th percentile of $80,000. The high school diploma wage was $40,000. Over the 34 year span, only the bachelor's degree group saw income growth. At the 75th percentile, it was 11%. At the median, it was 5.9%. The 25th percentile showed a roughly 0.5% drop. For high school only, the difference was -5.6%. The college-educated age range among the three points — 25th percentile, median, and 75th percentile — saw at most an 11% increase over the 34 years. However, U.S. Bureau of Labor Statistics inflation calculator shows that it took $2.36 at the end of 2024 to match the buying power of $1 at the end of 1990. That's 136% inflation, or general increase in the costs of living, compared to the 11% for the top paid in the sample. Can't afford a home or health insurance? It's a marvel people from 22 to 27 can afford a coffee or piece of avocado toast. Now for unemployment, with the graph below, also from the New York Fed. Unemployment rates over time In March 2025, the latest data on the chart, the overall unemployment rate was 4.0%. For all college graduates, it was 2.7%. Recent college graduates, 5.8%. And for all young workers, 6.9%. Over time, the all-college graduates group had the lowest unemployment rate. Then there were some changes starting just before the pandemic. All college graduates started getting a higher unemployment rate than all workers. All young workers still had the highest unemployment rates. Again, the promise of a future for dedication to, and later high expense of, a college education starts sounding like, if not an empty promise, one that is quickly leaking. No wonder, younger adults aren't reaching the same milestones as older generations.
