Hold On To Your Wallets: Fed Warns They Are Going To Have To Do Something They Haven’t Done Since 1994
Just a month ago, Federal Reserve chairman Jerome Powell brushed aside that they were “actively considering” raising interest rates by 3/4 of a percentage point. However, they are singing a different tune after the latest devastating report showing the highinest increase in inflation since 1981.
The report hit Wall Street hard, causing markets to dive.
Now economists believe that the Fed will announce a three-quarter-point hike on June 15, 2022, and will probably continue to raise them at least three times this year.
That also added fuel to the debate about whether the Fed will consider a 75 basis point rate hike and continue at a more aggressive pace. Both Barclays and Jefferies changed their forecasts Friday to include a 75 basis point hike for Wednesday, though other economists still expect a half point.
“In light of recent developments, no one will criticize the Fed for hiking [three quarters of a percent],” the Jefferies economists added.
On top of that, CNBC warns there are signals that America is headed into a recession:
In the bond market, Treasury yields rose after the hotter inflation report but the yield curve also flattened. That means shorter duration yields, like the 2-year, rose closer to longer duration yields, like the 10-year.
On Friday, the 2-year Treasury yield reached 3.06%, and the spread was only 10 basis points. If the 2-year were to move above the 10-year yield, the curve would be inverted, which is a recession signal.
Calvasina said the stock market, for now, is pricing in only a shallow recession. The S&P 500 has declined an average 32% in more traditional recessions, and in this cycle it has been down nearly 20%.
Meanwhile, a crazy Joe Biden is complaining about the fact that he doesn’t get as many pens to sign a bill as Obama did.
Biden wonders why “they” only give him one pen to sign bills when they gave Barack Obama 7 to 9 pens.
“I don’t know why they do this.” pic.twitter.com/1n7CkUXPiL
— RNC Research (@RNCResearch) June 13, 2022