2 firm inflation prints just made the Fed's 2025 rate cut path a lot 'murkier'
Published On Nov 14, 2024, 11:01 AM
Recent inflation data indicates that inflation continues at rates that are discouraging the Federal Reserve's anticipated rate cuts in 2025. The core Consumer Price Index (CPI) remained at 3.3% for three consecutive months, while the core Producer Price Index (PPI) rose to 3.1%. These figures suggest persistent inflation, which could lead to a more gradual approach to rate cuts than previously expected. Economists now project the Fed will ease rates by only 75 basis points in 2025, down from earlier expectations of four rate cuts totaling 100 basis points. This outlook has contributed to rising bond yields but has not adversely affected stock market performance, partly due to stronger-than-expected economic data.
Stock Forecasts
TLT
Negative
As inflation persists and the Fed signals a slower pace for rate cuts, the bond market could see continued volatility. Higher yields typically drive investors towards defensive stocks and sectors that benefit from stable economic growth.
SPY
Positive
Stocks, particularly in growth sectors, may perform well due to resilient economic data counteracting inflation concerns. However, the uncertainty around rate cuts could lead to fluctuating market conditions.
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