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Barclays Sees 50bp / ING Sees 75bp In Jul; Wells Fargo Sees 2023 Recession

FED
Fixed IncomeBulletMarketsEmerging MarketsForeign Exchange

A few immediate sell-side analyst reactions:

  • Barclays going for 50bp in July: "amid signs that consumption and the US housing market are slowing"
  • Wells Fargo: Powell "made clear that another 75 bps rate hike could come in July depending on how the data evolve over the next six weeks. This suggests to us the July 13 CPI release for June will be critical to the Committee's decision on the fed funds rate at the next meeting."
  • Following the meeting, Wells Fargo: "are changing our base case forecast for next year from an economic soft landing to a mild recession starting in mid-2023...we look for the Committee to hike rates by an additional 275 bps by early next year"
  • ING: "the risks to the Fed’s rate hike projections are to the upside...Between now and the July FOMC meeting we only have one round of data. The jobs report should be pretty good (hiring intentions surveys remain strong and there are 11.4mn vacancies) while inflation is likely to remain elevated given food and energy prices – the YoY rate won't start to really drop on favourable base effects until late 1Q through 2Q 2023. Consequently we now favour the Fed to follow up today’s move with another 75bp hike in July – note Fed Chair Powell acknowledging this possibility in the press conference."
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A few immediate sell-side analyst reactions:

  • Barclays going for 50bp in July: "amid signs that consumption and the US housing market are slowing"
  • Wells Fargo: Powell "made clear that another 75 bps rate hike could come in July depending on how the data evolve over the next six weeks. This suggests to us the July 13 CPI release for June will be critical to the Committee's decision on the fed funds rate at the next meeting."
  • Following the meeting, Wells Fargo: "are changing our base case forecast for next year from an economic soft landing to a mild recession starting in mid-2023...we look for the Committee to hike rates by an additional 275 bps by early next year"
  • ING: "the risks to the Fed’s rate hike projections are to the upside...Between now and the July FOMC meeting we only have one round of data. The jobs report should be pretty good (hiring intentions surveys remain strong and there are 11.4mn vacancies) while inflation is likely to remain elevated given food and energy prices – the YoY rate won't start to really drop on favourable base effects until late 1Q through 2Q 2023. Consequently we now favour the Fed to follow up today’s move with another 75bp hike in July – note Fed Chair Powell acknowledging this possibility in the press conference."