That's up from odds of only 32% for the smaller increase a day ago. In other words, Wall Street is now expecting a 62.5% chance that the Fed will raise rates by just a half-point at its next meeting. But for what it's worth, investors are now of the mindset that the Fed won't have to raise rates as aggressively as previously thought come September 21.īefore the release of Wednesday morning's CPI report, fed funds futures trading on the CME were indicating that the market was pricing in a 68% chance of another three-quarter point rate hike in September.īut after the better than expected inflation news was released, odds for that big of a hike have fallen to just 37.5%. The next Federal Reserve meeting is still six weeks away, and a lot more data on inflation, the job market and consumer spending will come out in the meantime. But the downturn will likely only last a few quarters.Ī 'for sale' sign hangs in front of a home on June 21 in Miami, Florida. The worst economic numbers will be in the fourth quarter of this year and early 2023, Peterson said. The good news is that she thinks it will be shallow and short-lived. What's more, Peterson is also predicting a recession in the next few months. Dana Peterson, chief economist with The Conference Board, told Kosik that she thinks a three-quarters of a point rate hike is still likely in September. He thinks investors will be surprised by good news later this year - and that's a key reason why his year-end target for the S&P 500 is 4,800, nearly 15% above current levels.īut the Federal Reserve still may need to keep aggressively raising rates, despite the slowdown in inflation. Even though stocks soared in July after a rotten first half of 2022, "People are still too bearish," Belksi said. That should reduce pressure on consumer prices.Īnd Belski told Kosik he thinks many investors still haven't factored that into their earnings forecasts. That said, he is encouraged by the fact that commodity costs are starting to decline and supply chain issues are abating.
"Inflation went up like an elevator but it will go down like an escalator," Brian Belski, chief investment strategist with BMO Capital Markets, told CNN's Alison Kosik on "Markets Now" Wednesday.īelski thinks inflation pressures will take time to ebb and that investors shouldn't expect prices to fall as quickly as they soared. But one market expert said investors need to be patient. The market is cheering the fact that the rate of consumer price increases edged lower in July. Customers leave a Walmart store on August 4 in Rohnert Park, California.
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