Global factory activity and global demand are weakening.
Rates markets no longer expect the Fed to raise rates again and are pricing in 75 basis points of easing this year. But falling yields and increased rate cut expectations are not supporting stocks and risk assets – recession fears are growing.
|
If the Fed does pause tightening campaign, it will be following the Reserve Bank of Australia, which kept its cash rate unchanged at 3.6% to break a run of 10 straight hikes.
Australian policymakers said they want time to assess the impact of past increases as the economy slows and inflation peaks. A similar message could come from the Reserve Bank of New Zealand on Wednesday, although it is still expected to hike by 25 bps.
Investors will scrutinize the accompanying commentary for any hints of an end to its tightening cycle. A slowing U.S. and global economy, and reverberations of last month’s banking shock, could tempt policymakers to ease up sooner rather than later.
|
