Wall Street Today | Fed's Collins Leans Toward Downshifting to Quarter-Point Hike

Money markets are pricing a rate peak around 4.9%, followed by nearly half a percentage point of rate cuts by the end of 2023. That's despite multiple officials in recent days delivering a sharply contrasting message: Rates are heading above 5% and will stay there all year.

"I think 25 or 50 would be reasonable; I'd lean at this stage to 25, but it's very data-dependent," Federal Reserve Bank of Boston President Susan Collins said. "Adjusting slowly gives more time to assess the incoming data before we make each decision, as we get close to where we're going to hold. Smaller changes give us more flexibility."

Pimco, which oversees roughly $1.7 trillion in assets, says that while a recession could further challenge riskier assets like stocks, "we continue to see a strong case for investing in bonds, after yields reset higher in 2022 and with an economic downturn looking likely in 2023."

Thousands of flights across the U.S. were delayed Wednesday after a Federal Aviation Administration pilot-alert system failed overnight, prompting a nationwide halt to departures.