US stocks (^GSPC, ^DJI, ^IXIC) are mixed on Monday morning as Wall Street prepares for a busy week with crucial economic data including the Consumer Price Index (CPI), the Index July Producer Price Index (PPI) and US retail sales. The Federal Reserve has repeatedly mentioned how economic data will impact policy decisions, so could this change the odds of an interest rate cut at the September FOMC meeting, which was priced in by the majority?
Jefferies Senior Economist Thomas Simons joins Catalysts to provide insight into the week of data shopping and what investors need to know about potential market moves ahead.
In terms of how the Fed will proceed with its monetary policy, Simons says, “I think maybe they’ll go twice this year, 25 basis points each. And then I’m just expecting at this point maybe 50 basis points of cuts each time.” Over the next two years as well, I think the Fed needs to be very, very careful about understanding that rate cuts could trigger some significant demand in areas that are interest rate sensitive.”
Simons considers that the US economy is in “pretty decent overall shape”, with “certain sectors performing a little worse than others”.
“Certainly, industry and housing, too, will probably do a little better with modest rate cuts. But, you know, it’s about maintaining a balance and trying to make sure that inflation doesn’t get out of control once again. So if things are starting to fall apart in some way or the job market is starting to get a little worse, I would be very happy to make more cuts.”
For more expert insights and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Nicolau Jacobino
