Analysts at Peggy Investments say they expect the Federal Reserve to cut interest rates three times in the next eight meetings
The Zhitong Finance App learned that analysts at Piper Sandler (Piper Sandler) said they expect the Federal Reserve to cut interest rates three times in the next eight meetings.
The investment firm notes that since the last Federal Open Market Committee (FOMC) meeting, the probability of extreme outcomes — such as drastic interest rate hikes or sharp interest rate cuts — has declined.
Although the uncertainty of inflation has abated, analysts say the economic outlook remains uncertain due to the wide distribution of gross domestic product (GDP) growth forecasts.
They said, “Our predictions for key macroeconomic variables are still too broad. Yes, the distribution of inflation results has shrunk significantly during this cycle. But, as we have emphasized time and again, this is not the case with real GDP growth. The possibility of a recession and rapid growth is high, and this will not strengthen 'confidence' in the Federal Reserve.”
Analysts also pointed out that the market prices short-term interest rates and believe that short-term interest rates may increase compared to long-term returns, which means that the prospects for a steep yield curve are still far away.
They emphasized that judging from the basic model, the nominal yield curve was not sufficiently inverted, and suggested that 2-year and 10-year yields may rebound by the end of the year. “Indeed, these signals are not unprecedented. Despite this, the results suggest that the prospects for a steeper yield curve are still far away.”