economy
Odds of a Fed rate hike by June are now higher than the chances for a rate cut
Something unusual is happening.
TL;DR
- The Atlanta Fed's Market Probability Tracker shows a higher chance of a rate hike by summer than a rate cut.
- This is a significant change from late February, when rate cut probabilities were much higher.
- The U.S.-Iran war and subsequent spike in oil prices are key factors contributing to increased inflation concerns.
- February's producer price index rose significantly, adding to fears of stagflation (high inflation and weak growth).
- Federal Reserve Chair Jerome Powell acknowledged the difficulty in balancing downside risks to the labor market with upside risks to inflation.
- Goldman Sachs analyst Amy Gower noted that Fed rate hikes could offset expected gains in gold prices, though she remains bullish on gold long-term.
- Carson Group strategist Ryan Detrick suggests technology, industrials, materials, and parts of energy sectors may perform well amid economic acceleration triggered by potential rate hikes.