{"id":34854,"date":"2023-07-12T20:56:12","date_gmt":"2023-07-13T00:56:12","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/u-s-stocks-rise-as-bulls-get-wish-on-inflation-report-yet-soft-landings-for-fed-are-pretty-improbable\/"},"modified":"2023-07-12T20:56:14","modified_gmt":"2023-07-13T00:56:14","slug":"u-s-stocks-rise-as-bulls-get-wish-on-inflation-report-yet-soft-landings-for-fed-are-pretty-improbable","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=34854","title":{"rendered":"U.S. stocks rise as bulls get \u2018wish\u2019 on inflation report, yet soft landings for Fed are \u2018pretty improbable\u2019"},"content":{"rendered":"
\n

Markets seem to be embracing the notion of a soft landing for the U.S. economy despite inflation remaining above the Federal Reserve\u2019s 2% target.<\/p>\n

\u201cSoft landings are not impossible, but they\u2019re pretty improbable,\u201d said Bob Elliott, co-founder, chief executive officer and chief investment officer at Unlimited Funds, in a phone interview. \u201cThey\u2019re particularly challenging in an environment where the labor market is tight,\u201d he said, and yet \u00a0<\/strong>\u201cmany investors are sort of enamored with this idea that we could get a soft landing.\u201d<\/p>\n

\n

The U.S. stock market was rising Wednesday after fresh data showed inflation rose in June slightly less than expected. Meanwhile, the unemployment rate remains low in the U.S., with wage growth helping to fuel consumer spending in an economy that grew at a revised 2% annualized pace in the first quarter.\u00a0\u00a0<\/p>\n

\u201cThere\u2019s a race going on between the Fed slowing the economy down, and then on the other side, inflation becoming entrenched,\u201d said Elliott. In that race, the Fed has been \u201cone or two steps behind,\u201d he said, ahead of Wednesday\u2019s inflation reading.<\/p>\n

The consumer-price index showed U.S. inflation rose 0.2% in June for a year-over-year rate of 3%, according to a report Wednesday from the Bureau of Labor Statistics. Core CPI, which excludes energy and food prices, increased 0.2% last month for a year-over-year rate of 4.8%. The Bureau of Labor Statistics said core inflation\u2019s rise in June marked the smallest monthly increase since August 2021.\u00a0<\/p>\n

\u201cThe Fed will see the June CPI report as progress, but they are still very likely to raise the target rate a quarter percent at their decision in July,\u201d Bill Adams, chief economist for Comerica Bank, said in emailed comments Wednesday. \u201cThe Fed would rather overtighten and slow the economy more than necessary than under-tighten and risk inflation accelerating when the economy regains momentum.\u201d<\/p>\n

Many investors have been expecting the Fed to hike its benchmark interest rate by a quarter percentage point at its policy meeting later this month, which would bring it to a targeted range of 5.25% to 5.5%. Federal-funds futures on Wednesday pointed to a 92.4% probability of such a rate hike and a slightly more than 80% chance of the Fed then pausing at its next meeting in September, according to CME FedWatch Tool, at last check.<\/p>\n

After the expected increase in July, traders in the fed-funds-futures market were on Wednesday largely expecting the Fed to hold rates steady for the rest of the year.<\/p>\n

\u00a0<\/strong>\u201cThe bulls get their wish \u2013 CPI print came in better than expectations,\u201d said Rhys Williams, chief strategist at Spouting Rock Asset Management, in emailed comments Wednesday. \u201cWe think the danger now is that the Federal Reserve does one too many rate increases and the soft landing turns into something harder.\u201d<\/p>\n

In Elliott\u2019s view, both the stock and bond markets lately appeared to be embracing the idea of a soft landing for the economy.<\/p>\n

The yield on the two-year Treasury note, which recently has been trading below the Fed\u2019s benchmark rate, tumbled after the CPI report was released Wednesday. Two-year yields
\n TMUBMUSD02Y,
\n 4.737%<\/bg-quote>
\n were down about 16 basis points around midday Wednesday at 4.73%, according to FactSet data.\u00a0<\/p>\n

\u201cAs the Fed has moved interest rates to very restrictive levels thus far, and probably will execute another hike or possibly two from here, we think that patience should be a real virtue in their overall disposition toward ongoing monetary policy,\u201d said Rick Rieder, BlackRock\u2019s CIO of global fixed income and head of the firm\u2019s global allocation investment team, in emailed comments Wednesday. \u201cToday\u2019s CPI report for June displayed notable moderation, which is good news for policy makers, markets and households overall.\u201d<\/p>\n

U.S. stocks were up Wednesday afternoon, with the S&P 500
\n SPX,
\n +0.74%<\/bg-quote>
\n gaining 0.7% while the Dow Jones Industrial Average
\n DJIA,
\n +0.25%<\/bg-quote>
\n rose 0.4% and the Nasdaq Composite
\n COMP,
\n +1.15%<\/bg-quote>
\n advanced 0.9%, according to FactSet data, at last check. The stock-market\u2019s fear gauge, the Cboe Volatility index
\n VIX,
\n -8.76%<\/bg-quote>,<\/span>
\n was down more than 7% at 13.8 around midday Wednesday.<\/p>\n

Read:<\/strong> S&P 500 is most likely going to correct back to 4,100, Mizuho warns market bulls<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Markets seem to be embracing the notion of a soft landing for the U.S. economy despite inflation remaining above the Federal Reserve\u2019s 2% target. \u201cSoft landings are not impossible, but they\u2019re pretty improbable,\u201d said Bob Elliott, co-founder, chief executive officer and chief investment officer at Unlimited Funds, in a phone interview. \u201cThey\u2019re particularly challenging in […]<\/p>\n","protected":false},"author":1,"featured_media":34855,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-34854","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nU.S. stocks rise as bulls get \u2018wish\u2019 on inflation report, yet soft landings for Fed are \u2018pretty improbable\u2019 | iFintechWorld<\/title>\n<meta name=\"description\" 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