Page 9 - Fed Pivot News Today

Stock rallies have been fleeting since June, and one key indicator suggests a looming reversal, UBS's Art Cashin said Friday.

Market talk that interest rates could peak soon is just talk. With US inflation still elevated and the jobs market holding up, the Fed has no reason to stop the hikes. Even if it is closer to the end of its hiking cycle than it is to the beginning, it is likely it would want to linger at the top of its hiking cycle before it starts to cut rates.

A Fed pivot from aggressive rate hikes is coming - and the central bank needs to stop flinching at rising stock prices, Fundstrat's Tom Lee said.

The Guggenheim CIO also said the Fed's acknowledgement of lags in monetary policy opens the door to a pivot by the US central bank.

The Fed issued another 75bp rate hike on Wednesday, bringing the fed funds rate to its highest level since 2008 as it struggles to tame inflation.

The US central bank is expected to hike rates by an outsized 75 basis points once again Thursday, as it battles to curb soaring prices.

"This week's Fed meeting is critical for the rally to continue, pause or even end completely," Wilson said in a recent Morgan Stanley research note.

The Fed will be challenged to stick a soft-landing at this point, top economist Mohamed El-Erian warned.

"The Fed seems almost assured of raising rates by 75 basis points this week" despite investors' hopes that it will pause or pivot, the bank said.

The economy isn't weakening as fast as expected, which means the Fed will press forward with rate hikes until end of 2023, a JPMorgan strategist said.