![]() Most of Wall Street believes Congress will come to a deal before the deadline, as it has many times before, because the alternative would be so dire. government debt is the safest investment available. could default as early as June 1 04:00Ī default could be disastrous because much of the financial system is built on the assumption that U.S. "Admittedly this is a 20:20 hindsight view and the Fed's job is as tough as it has ever been, but while it would be nice to be finished with the Fed hiking cycle, too much caution in the past, among other factors, caused the current inflation overshoot and there remains a distinct possibility that it could accelerate again, especially given all the uncertain factors in the world today," said John Vail, chief global strategist at Nikko Asset Management. Still, some investors anticipate the Fed on Wednesday may not offer encouraging signals that rate hikes are over, let alone open the door to rate cuts. That would offer the market more breathing room, and stocks have historically done well in the months immediately following the last rate hike. That has many traders betting the Fed will halt its rate hikes and perhaps even cut them later this year. Many investors are preparing for a recession to hit later this year. High rates have already hit the housing market sharply and hurt the banking system. An economic model used by the Conference Board, a business research group, puts the probability of a U.S. There is widespread skepticism that the Fed will succeed. The central bank's policymakers are aiming for a so-called soft landing: Cooling growth enough to curb inflation, but not so much as to tip the world's largest economy into a recession. Credit Suisse faulted over probe of Nazi-linked bank accounts.SVB and First Republic's problems aren't going away.Troubled First Republic Bank seized and sold to JPMorgan Chase.It's trying to beat down high inflation, but high rates do that by taking a blunt hammer to the economy. ![]() The Fed has jacked up rates at a furious pace from early last year, up to a range of 4.75% to 5% from virtually zero.
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