Fed: Warsh signals tighter path – Deutsche Bank
Deutsche Bank strategists report that after a hawkish Federal Open Market Committee (FOMC) under new Chair Kevin Warsh, they now forecast two 25 bps Fed hikes in 2026, likely in September and December, taking the fed funds rate to around 4.1%. Markets have repriced to about 39 bps of tightening by December, with the Treasury curve flattening as short-end yields rise.
Two hikes and prolonged pause projected
"Moving over to the other side of the Atlantic, after a hawkish FOMC last week with a clear shift in style from new Fed Chair Kevin Warsh, our economists now have two 25bps hikes in their Fed forecast."
"The central scenario sees two rate increases this year, likely in September and December, taking the fed funds rate to around 4.1%, followed by a prolonged pause through 2027."
"But even as inflation expectations fell, the Fed’s latest decision on Wednesday led to a clear hawkish repricing for markets."
"Notably, 9 of the 18 officials in the dot plot signalled there should be a rate hike this year, although new Chair Kevin Warsh did not submit a dot himself."
"By the end of the week, 39bps of Fed hikes were priced in by December, up from 21bps at the start of the week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Energy & Utilities Roundup: Market Talk
The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET. 0637 GMT - SK Innovation is likely to benefit from higher lubricant base oil prices, LS Securities analyst K.H. Chung says. The South Korean refiner is a global leader in premium lubricant base oils, producing about 80,000 barrels of Group III base oils a day, Chung writes in a note. She expects the supply shortage of lubricant base oils to persist for more than a year. Tight supply of kerosene and diesel and wider refining margins could also continue to boost the company's earnings, she adds. LS Securities upgrades the stock to buy from hold and raises its target price to 187,000 won from 126,000 won. Shares end 2.6% higher at 158,000 won. (kwanwoo.jun@wsj.com) 0113 GMT - YTL Power International could see upside from its expanding data-center and AI infrastructure, as well as renewed power-generation opportunities, says Hong Leong IB analyst Daniel Wong in a note. Its Kulai and Sedenak West hubs offer 2.4GW of potential data-center capacity, while its AI-GPU capacity could scale to 100MW or more and support a new services business. The procurement of seven gas turbines totaling 5.25GW also positions YTL for power-generation growth and supports its expanding data-center pipeline, he reckons. Higher water tariffs and planned treatment plants at its unit Ranhill Utilities should support earnings as Johor's water demand rises, he adds. Hong Leong raises its target price to 8.08 ringgit from 7.58 ringgit and keeps a buy rating. Shares are 1.4% higher at 5.62 ringgit. (yingxian.wong@wsj.com) The price fetched by Amplitude Energy for its natural gas in 1Q should improve on the prior three months, supporting growth in revenue. That's the view of Bell Potter analyst Stuart Howe, who points to higher gas volumes in the quarter. Also, spot natural gas prices recovered to a quarterly average of A$9.77 per gigajoule, from A$8.42 per gigajoule in 4Q of FY26. Amplitude is due to report its 1Q p
After a two-month drop of 11%, Goldman Sachs reverses stance and goes long: Is a "golden dip" coming for the semiconductor sector?
Goldman Sachs has turned positive on the Philadelphia Semiconductor Index after an 11% decline over the past two months, shifting its third-quarter outlook. The bank is optimistic about equipment, storage, and analog sectors, issuing "Buy" ratings for 12 stocks including AMD, while remaining bearish on Arm and Texas Instruments.
Forex Today: US Dollar clings to bullish stance ahead of mid-tier data releases
TSMC (TSM.US) receives bullish rating from Goldman Sachs ahead of earnings: Strong AI demand supports growth momentum through 2027, with nearly 40% upside potential for stock price
Goldman Sachs stated in a recent research report that TSMC's strong performance growth momentum is expected to continue until 2027, and its capital expenditure will gradually increase to support long-term demand.
Crypto prices
More
