Despite February’s inflation prints, markets remain steadfast in their belief that the Federal Reserve will commence finance charge rate cuts in June. RBC Capital Markets Head of US Equity plan Lori Calvasina joins Yahoo financial Live to discuss why economic data is forcing the Fed on a cautious path to rate cuts.
Calvasina notes that the recent lackluster data has forced investors to “ratchet down their expectations” significantly for rate cuts. She cites rising “concerns of inflation coming in hotter than anticipated,” saying the muted industry reactions to the February CPI and PPI data “make sense.”
However, Calvasina points out that there has been “a stabilization in earnings estimates,” suggesting a strong economy, which leads investors to believe “the Fed can’t possibly cut.” She notes that “the economic narrative has completely flipped.” However, she points out that recession concerns are no longer a pressing issue.
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