Fed watchers are ready for higher interest rates for a longer period

Fed watchers are ready for higher interest rates for a longer period

On Tuesday, markets are betting that the Fed will take a stance on interest rates on Wednesday. But with oil prices rising, inflation high and the economy showing surprising strength, Wall Street is confident the central bank will leave rates at or near a two-decade high by next year — and again. Can also increase.

The higher-longer policy stance would likely be a blow to potential home buyers and businesses, and could undermine President Biden’s economic growth message in an election year.

Investors will focus on the Fed’s quarterly economic projections, In June, the last time the Fed issued a forecast, the central bank left open the possibility of an autumn hike amid much uncertainty about inflation, which is still above the Fed’s 2 percent target, although recent Recently it has started declining.

Concerns over inflation still remain, however, with Brent crude hitting a 10-month high of $95 a barrel on Tuesday morning. Investors on both sides of the Atlantic dumped bonds on Monday, with yields on the 10-year inflation-adjusted Treasury note rising. reached its highest level in 14 years Fear that the Fed will remain tight on interest rates.

Fed likely to anticipate rate hike later, Michael Ferroli, JPMorgan’s chief U.S. economist, told The Times. Bank of America economists have made similar predictions. “November is a close call, but we maintain our expectation of a final 25bp hike,” the bank’s chief U.S. economist Michael Gapen wrote in a note to clients on Monday.

Good News: Wall Street thinks the Fed will cut rates next year as inflation is slowly declining. But economists expect the key lending rate to remain near 5 percent at the end of next year. The Fed should also provide some clarity on this: Its projections will include a year-end forecast on rates through 2026.

The uncertain economic outlook will complicate Biden’s message. The White House is talking up the job-creating effects of “Bidenomics” as it tries to convince voters that the president has managed the economy well amid declining poll ratings. The jobs market remains strong, but summer strikes are at risk of hurting growth. And consumers and small businesses are likely to feel the effects of the Fed sticking to its policy of higher rates acutely.

California’s governor will sign a historic climate disclosure bill. Gavin Newsom said he would approve a proposal to force large companies to detail their carbon emissions. The law, the first enacted by a US state, would apply to about 5,000 businesses and comes as the SEC prepares its own climate disclosure rules for companies.

FTX sued Sam Bankman-Fried’s parents. Lawyers for a bankrupt cryptocurrency exchange accused Joe Bankman and Barbara Fried, two longtime Stanford University law professors, of enriching themselves with money stolen from customers by their son. Spokespeople for Bankman and Fried did not immediately respond to requests for comment.

Western business confidence in China declined. US and European companies It is said that geopolitical tensions and the deteriorating environment for international commerce in the country have seriously affected the outlook for businesses operating there. The deepening economic slowdown, rising data-security demands and a crackdown on due-diligence firms linked to foreign countries have increased the difficulties of doing business in China.

YouTube blocked Russell Brand’s channel from making money. The video platform said it had “suspended monetization” on the comedian’s channel after he was accused of rape and sexual assault. The brand has established itself as an anti-establishment activist in recent years and has amassed over six million YouTube subscribers. He has denied the allegations.

Investor hopes for an initial public offering got a boost on Monday after grocery delivery app Instacart priced its stock sale. at $30 per share, the top end of the already advanced range. Its stock is set to begin trading on Nasdaq on Tuesday morning under the ticker symbol CART.

That’s a positive sign for the IPO business, which – after a strong start for chip designer Arm – now has two major successes that point to a comeback for that market. But there is still reason for investors and market newcomers to be cautious.

Instacart is following a more conservative playbook for the new IPO:

  • Like Arm, the company secured so-called cornerstone investors, who agreed to buy stock before offering their shares to other potential buyers, thereby setting a floor for demand.

  • Instacart has also set up a relatively conservative valuation, a change from 2021 when investors were willing to pay almost any price for it. Earlier this month, the company had initially sought a valuation of less than $9.3 billion, a sharp decline from its $39 billion valuation two years ago; At the IPO price, the company’s potential valuation is now $9.9 billion.

  • And it has emphasized its profitability, another change from boom times when investors struggled for a share of companies that were deep in losses.

The week’s second-most-watched IPO, advertising software maker Klaviyo, has also taken similar steps. The strategy appears to be succeeding: Clavio raised its price range on Monday, bringing its potential valuation to around $9 billion.

But don’t expect the golden days of IPOs to return in the near future. Arm’s strong debut increased investor interest in the new offering. But its shares have fallen by 8.8 per cent since the first day of trading as its momentum has ended. (Among the possible culprits: A new analyst report raises questions about whether its chip design will play a role Big role in Artificial Intelligence softwareAs claimed by the company.)

Arm isn’t alone: ​​More than two-thirds of the companies going public this year are now are trading below their IPO pricesCNBC notes.

Elon Musk has come under fire for many things since purchasing Twitter, now known as X, but the harshest criticism has focused on the rise of hate speech and anti-Semitism on the social network. .

A meeting with Israeli Prime Minister Benjamin Netanyahu in California on Monday may temporarily deflect some of those condemnations. But whether that’s enough to lure advertisers back is unclear — which may explain why Musk is considering it. new monthly fee For X users.

Musk is trying to avoid his critics. anti-semitic post more than double In the first nine months after buying Twitter in October 2022. The Anti-Defamation League, a Jewish civil rights group, has accused him of allowing anti-Semitism to spread. Musk hit back, saying the ADL was trying to “kill X” by driving away advertisers. He Threatened to file defamation case against the organization,

Netanyahu urged Musk to “find a balance” between free expression and fighting anti-Semitism. “I know your commitment to freedom of expression,” he said in a live-streamed conversation on X. “I also know your opposition to anti-Semitism,” Netanyahu said.

“Obviously I’m against anti-Semitism — I’m against anti-Semitism of anything,” Musk said. But “sometimes free speech means that someone you don’t like says something you don’t like,” he said, pointing out that there are millions of posts a day on X and “Some of them are going to be bad.”

The ADL was cautious in its response. ,“We applaud PM Netanyahu for raising concerns about the spread of anti-Semitism on X/Twitter,” ADL CEO Jonathan Greenblatt said in a statement, adding that he hopes Musk will take those concerns seriously.

Others have pointed out that Musk himself has increased attacks on individuals. Joel Roth, the former head of trust and safety at Twitter, wrote for Times Opinion that he had to go into hiding and repeatedly change positions after Musk claimed without evidence that Roth had condoned pedophilia.

Netanyahu and Musk found some common ground in having high-profile targets. Israelis have protested for months against his controversial judicial reform plan. “It’s not an easy thing to be disgraced – I know you’ve never seen anything like it, right?” The Prime Minister said. “Me, defamed?” Musk said laughing. “Never.”

With no success, UAW is threatening extend your strike against the three big Detroit automakers for more plants. The standoff is becoming more politically charged as Donald Trump joins President Biden in trying to win the support of the union’s 150,000 members.

UAVs plan to set new attack targets this week, If negotiations with automakers do not move fast enough. It could escalate an already historic strike that is simultaneously targeting Ford, General Motors and Stellantis plants. “We’re not waiting around and we’re not messing around,” union President Shawn Fenn said.

Automakers have said they are trying to optimize operations to produce more electric vehicles and cut costs to compete Fast growing rivals like Tesla,

Meanwhile, Trump plans to address union members in Detroit on Wednesday. Skipping the second Republican presidential primary debate. Trump is embroiled in a battle with UAW leaders – workers were “sold down the river by their leadership”, he said of Fain, who later criticized Trump as an out-of-touch billionaire. . But the former president is hoping to win over rank-and-file union members.

Among their arguments is that Biden’s push for more electric vehicles will hurt UAW members because those cars and trucks are produced in factories that require less labor. Biden has defended EV jobs, saying they pay “good wages.” Describing himself as the most pro-union president in history, Biden has promised to send top administration officials to Detroit in hopes of breaking the impasse.

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