From Morningstar: 2024-04-11 06:03:00

The Consumer Price Index rose 3.5% in March, surpassing expectations and February’s rate. Current focus is on the Fed’s interest rate cut, with expectations shifting to September from June due to stubborn inflation. Bank of America economists termed the report discouraging for a June rate cut.

The Fed’s rate cuts are contingent on a declining inflation trend. Recent higher-than-expected inflation readings have raised worries of stalled progress in reducing inflation. Market reaction to the CPI report has drastically shifted expectations for a June rate cut to September, with odds of Fed holding rates steady in July.

Bond traders are now less confident in a June rate cut, with expectations shifting to September cut. Further rate cuts in 2024 have been scaled back significantly, with investors now expecting two cuts by year-end and a 30% chance of only one. Pimco economist suggests delaying the first cut post- mid-year based on the latest data.



Read more at Morningstar: 4 Charts on Plunging Expectations for US Fed Rate Cuts