Not only are the number of rate cuts diminishing in the bank's forecast, but Larry Summers warns that the odds of another rate hike have risen after March's CPI.
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Equity markets are adapting to a stronger growth environment, as evidenced by the strong performance of cyclical sectors such as energy and materials, Morgan Stanley said.
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With Federal Reserve Chairman Jerome Powell set to speak soon, markets are skeptical that the central bank will begin easing as early as June. Money market traders disagree with the Fed and most analysts on the timing of the first rate cut of the year and the easing model. At the same time, they also lowered the expected three rate cuts in 2024, but with continued inflation and strong economic data, the Fed itself may slowly accept this view.