Latest news with #ratecuts
Yahoo
8 hours ago
- Business
- Yahoo
Fed Chief Kashkari's 'Wait-and-See' on Rate Cuts
Minneapolis Fed chief Neel Kashkari still sees room for two rate cuts this yearmaybe kicking off around Septemberbut he's urging colleagues to stay nimble, since today's tariffs could fuel tomorrow's inflation. In a Friday essay, Kashkari admitted that inflation is inching back toward the Fed's 2% goal, yet he's worried that Trump's sweeping tariffs have injected fresh uncertainty. He's kept his call for two cuts in 2025 (first one tentatively in September), but he's clear: don't pencil in an easing path now only to discover later that higher import fees have bumped up consumer prices. Most Fed speakers this weekexcept Governors Waller and Bowmanhaven't even seriously entertained a July cut. Kashkari wants the focus on actual inflation and real economic data, not a pre-set calendar commitment. If tariffs stick around, businesses will likely pass those extra costs on to you and me. By staying data-driven, Kashkari hopes to avoid a policy misstep that could let inflation creep back in. Keep an eye on incoming CPI and PCE reportsand any fresh trade headlines. If the tariff saga deepens, Kashkari's call for flexibility could push rate cuts into late 2025or beyond. This article first appeared on GuruFocus. 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
10 hours ago
- Business
- Yahoo
Bank of America explains how a market bubble could soon form — and lays out the perfect trade to combat it
BofA analysts say risks of a stock market bubble in the second half are building. The bank's Michael Hartnett said expectations for rate cuts and lower taxes are fueling inflows to stocks. His team says a top trade is owning US growth stocks and international value stocks. A Bank of America analyst sees the risk of a speculative stock market bubble increasing as expectations that the Federal Reserve will cut interest rates continue to rise. In a note on Friday, BofA's Michael Hartnett highlighted a shift that he sees approaching, one that could lead to complications for investors—and he also shared his view on a trade to hedge such a scenario. Geopolitical tensions and tariff updates from President Donald Trump have been headwinds for markets. But with the Israel-Iran ceasefire continuing to hold, the focus has shifted to the possibility of interest rate cuts in July. Federal Reserve chairman Jerome Powell opted to leave rates steady at this month's meeting, but several top officials since then have come out in support for a cut as soon as next month. As Hartnett's team sees it, investors have begun to adjust for a higher likelihood that Powell will pivot in his stance and cut interest rates. On top of that, Trump's "Big Beautiful Bill" is likely to result in lower taxes for corporations and some households. "H2 bubble risk high as Trump/Powell pivot from tariffs to tax cuts/rate cuts to incite US$ devaluation/US stock bubble," Hartnett wrote. Hartnett and his team go on to say that the best way for investors to play the market against the backdrop of a potential bubble is by owning US growth stocks and international value stocks, presenting it as a means of finding a balance between risk and reward. They highlight this strategy as an effective way to guard against the potential impact of the predicted second-half bubble, as it offers exposure to growth in both US and international markets. Other experts have shared similar strategies for handling this year's high levels of market and economic uncertainty. Investor Bill Gross said this week he was eyeing a small bull market for stocks and a small bear market for bonds, highlighting the strategy of buying one and selling the other. Read the original article on Business Insider
Yahoo
13 hours ago
- Business
- Yahoo
Is Wall Street's rally ignoring risks ahead?
Markets (^GSPC, ^IXIC, ^DJI) have climbed off the April lows, but new trade tensions and pulled earnings guidance are keeping investors on edge. Yahoo Finance Senior Reporter Allie Canal joins Market Domination to break down what could be next as Wall Street eyes rate cuts and braces for a volatile second half of the year. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Investors are really riding a wave of optimism here fueled by strong earnings, AI momentum, those hopes for Fed rate cuts, even as warning signs mount beneath the surface here. And we've seen tech, we've seen financials lead this charge higher since those April lows, but today brought a reality check, right? President Trump abruptly ending those trade talks with Canada just hours after announcing a deal with China. At the same time, several high-profile companies from GM and Mattel to American Airlines, they pulled that earnings guidance last quarter, citing global trade uncertainty, and that's added to a lot of this market volatility that we've seen in the first half of the year, but it also sets the stage for potential upside surprises. So while markets may be enjoying these highs, investors should brace for more twists and turns in the second half of the year. Here's what Wall Street strategists told us this week. At some point, uh, in the second half, we expect the Fed to cut rates. So I think all that means the market will does move higher, but there'll certainly be some gut checks along the way. The broad picture is that we are going to be in an environment where we're going to see increased fog in the data at the same time as there is increased fog from policy uncertainty and from really significant movements in terms of tariff announcements. We can filter in the knowns, hopefully, we'll get a little more clarity of how at least the Fed is seeing tariff policy with inflation, and I think we can get that with the dot plots. We just pull together how they see growth versus inflation and the impact on unemployment. So you heard the Fed mentioned quite a bit there, and to that point, markets are still pricing in a rate cut in September. We have seen the odds of a July cut rise over the past week or so. I think a lot is going to come down to that labor market report that we'll be receiving next week. If we see any material weakness on that front, I think that would increase your odds of a July cut, but that is the big question mark on the table right now heading into the back half of 2025, but so far, markets seem to really be looking through a lot of this noise and we're trading near or at those record highs currently. Sign in to access your portfolio
Zawya
a day ago
- Business
- Zawya
Fed's Kashkari expects two rate cuts this year, with pause possible
Federal Reserve Bank of Minneapolis President Neel Kashkari is sticking to his view that cooling inflation will allow the world's most important major central bank to cut its policy rate twice this year, starting in September. In an essay released on Friday, Kashkari also signalled that if progress on inflation stalls or reverses the Fed could simply pause its rate-cutting cycle until prices ease again. Tariffs suggest an inflation boost is "likely coming," he said, as more goods from Asia, subject to the biggest tariff increases, arrive on the shelves of U.S. businesses. While businesses may not want to risk angering customers by charging more for their wares, they will start passing on price increases in the absence of trade deals lowering tariffs, he said. In this scenario, the effect of tariffs on inflation may simply arrive later than expected, Kashkari said. At the same time, Kashkari said, the economic data so far has revealed "only a modest imprint of the effects of tariffs on prices, activity or the labor market," with inflation making renewed progress toward the Fed's 2% goal. That may suggest, he said, that companies have won exemptions, have adjusted their supply routes, or are otherwise finding ways to avoid the tariffs altogether, limiting the impact on inflation. "Those opposing signals have led me to maintain my outlook for two cuts over the remainder of 2025, implying a possible first cut in September, barring some surprising development before then," Kashkari said. "If we were to cut in September and then the effects of tariffs showed up this fall, I believe we should not be on a preset easing course" but could adjust to fit the new data, he added. "If the data called for it we could hold the policy rate at the new level until we gained greater confidence that inflation was headed back to our target." For now, though, Kashkari said: "We should put more emphasis on the actual inflation and real economic data that we are seeing without committing to an easing policy path in case the effects of tariffs are merely delayed." Last week, Fed policymakers left their overnight target rate for lending between banks unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring. (Reporting by Ann Saphir Editing by Shri Navaratnam)
Bloomberg
a day ago
- Business
- Bloomberg
Fed's Waller Already Acting Like Shadow Chair: RenMac's Dutta
Neil Dutta, head of US economic research at Renaissance Macro, makes the case for Federal Reserve Governor Christopher Waller to be the next Fed Chair and says he's already making the argument for rate cuts and acting like a shadow chair. (Source: Bloomberg)
