Zhitong Finance noted that the U.S. economic report showed that inflation cooled and retail sales were flat in April, raising investors 'hopes for a "soft landing" for the economy. Stock and bond markets rose on Wednesday.
Both overall and core consumer prices in the United States (excluding food and energy) rose slightly less than expected, rising 0.0% month-on-monthgamingcryptocompanies.3%。Retail sales were weaker than expected and were flat compared with the expected 0.4% growth.
The reports boosted investor optimism, pushing the S & P 500 to a record closing high of 5308 on Wednesday, up 1.2%. Indices that are more susceptible to interest rates have gained more.
Yields in the fixed-income market fell across the board, with the 10-year Treasury yield falling 11 basis points to 4.34%.
As a result, the market is now repricing that a rate cut will occur in the second half of 2024.
UBS strategists commented: "The federal funds futures market currently predicts that the Federal Reserve will cut interest rates by about 51 basis points in 2024, which is in line withgamingcryptocompaniesOur own forecast of the Federal Reserve's two 25 basis points cut interest rates this year starting in September is consistent."
"U.S. retail sales in April were below expectations (flat against the 0.4% growth forecast), coupled with downgrades in previous months, support our view of a soft landing," they added.
The control group, which excludes automobiles, gasoline and other specific categories, also fell short of expectations, causing the Atlanta Fed to cut its second-quarter GDPNow forecast from 4.2% to 3.8%.
UBS expects further downgrade as more data is released. In addition, consumer confidence has also fallen, with a University of Michigan survey showing consumer confidence falling to its lowest level since November last year, and an NFIB survey showing persistent pessimism among small business owners.
The ISM services PMI also entered contraction territory in April.
As a result, UBS believes Federal Reserve Chairman Powell's speech on Tuesday reiterated the Fed's data-dependent approach and expects the Fed to cut interest rates by 50 basis points this year if favorable data persist.
"We expect the 10-year Treasury yield to fall to 3.85% by the end of the year and maintain our optimistic outlook for high-quality bonds and high-quality stocks," the agency said.