Economists Speak In Chorus: Fed's 15-Month Hiking Cycle Set to End in June; Markets At Risk If The Call Is Incorrect
Portfolio Pulse from Piero Cingari
Economists predict the Federal Reserve will end its 15-month streak of interest rate increases in June, with investors pricing in an 80% chance of unchanged rates. A surprise rate hike could cause high volatility and damage to risky assets. Stocks of regional banks, consumer discretionary, and tech sectors have rallied in anticipation of a pause in interest rate hikes.
June 09, 2023 | 2:17 pm
News sentiment analysis
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NEGATIVE IMPACT
SPDR S&P Regional Banking ETF (KRE) has rallied 16% in the last month on hopes of an industry recovery and less tight credit conditions. A surprise rate hike could negatively impact KRE.
KRE has rallied on the expectation of a pause in interest rate hikes, which would benefit regional banks. A surprise rate hike would go against this expectation and could negatively impact KRE's performance.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Invesco QQQ Trust Series 1 (QQQ) has seen gains aligning with the Consumer Discretionary Select Sector SPDR Fund (XLY) due to expectations of a pause in interest rate hikes. A surprise rate hike could negatively impact QQQ.
QQQ has seen gains due to the market pricing in a pause in interest rate hikes. A surprise rate hike would go against this expectation and could negatively impact QQQ's performance.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Consumer Discretionary Select Sector SPDR Fund (XLY) has increased 9% over the past month due to expectations of a pause in interest rate hikes. A surprise rate hike could negatively impact XLY.
XLY has increased due to the market pricing in a pause in interest rate hikes. A surprise rate hike would go against this expectation and could negatively impact XLY's performance.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 100