Home ›› 12 Jan 2023 ›› Stock
Wall Street’s main indexes were set to open higher on Wednesday with the focus shifting to a key inflation reading due later in the week, which would provide clues on how aggressive the Federal Reserve’s monetary tightening could be this year.
After the Fed’s rapid pace of interest rate hikes to curb decades-high inflation pummeled equities in 2022, markets have been clinging on to
hopes that signs of a slowdown in the economy could pave the way for a less hawkish stance from the US central bank.
The highly awaited inflation report from the Labor Department on Thursday is expected to show U.S. consumer prices likely grew 6.5% year-on-year in December, from 7.1% a month ago, while core inflation grew 5.7% in December, from 6% in November, reported Reuters.
While further evidence of an easing in price pressures could bolster hopes of the Fed pausing its rate hiking cycle soon, recent comments by some policymakers have supported the view that the central bank needs to remain aggressive in raising interest rates to bring inflation under control.
Some Fed officials, such as Atlanta Fed President Raphael Bostic, are expecting the peak policy rate to go beyond 5% this year.
“(Investors) feel inflation is being tamed and that there’s more risk of not being in the market than there is of being in the market,” said Christopher Grisanti, chief equity strategist at MAI Capital Management in Cleveland.
“If there’s good inflation numbers, February may be the last hiking, or they (the Fed) may even pause.”
Money market participants see a 77% chance the Fed will raise the benchmark rate by 25 basis points to 4.50%-4.75% in February, and see rates peaking at 4.92% by June.
