September Rate Pause Odds Soar As Wall Street Economists Forecast Weaker Outlook
Portfolio Pulse from Piero Cingari
Investors' bets on a pause at the Federal Reserve's September meeting surged to an 81.5% probability, the highest recorded thus far. The disappointing July manufacturing activity data and a decline in job openings have been driving expectations higher for an interest rate pause. Mild inflation data expected before the September 19-20 meeting, along with potential challenges like the recommencement of student loan payments, are seen as reasons to justify a temporary pause in rate hikes.
August 04, 2023 | 9:42 am
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Economists at PNC Financial Services Group estimate that the recommencement of student loan payments, averaging $350 to $400 per month for nearly 27 million borrowers, could negatively impact consumer spending.
The recommencement of student loan payments could potentially lead to a decrease in consumer spending, which could negatively impact the financial sector, including PNC. This could potentially lead to a decrease in PNC's stock price in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 70
NEUTRAL IMPACT
Douglas Porter, the chief economist at Bank of Montreal, believes the incoming data will align with the Federal Reserve’s expectations. He suggests that the current state of short-term rates, decreasing core inflation, and a softening labor market indicate that the Federal Reserve’s actions have been sufficient.
The comments from BMO's chief economist suggest that the bank is in agreement with the Federal Reserve's current actions and expectations. This could potentially have a neutral impact on the bank's stock as it indicates stability in their economic outlook.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
The potential pause in interest rate hikes by the Federal Reserve could impact the broader market, which is represented by the SPY ETF.
The potential pause in interest rate hikes by the Federal Reserve could have a mixed impact on the broader market. While it could be seen as a positive sign for companies with high levels of debt, it could also be seen as a negative sign for the overall economy, which could impact the SPY ETF.
CONFIDENCE 80
IMPORTANCE 80
RELEVANCE 80