Here are the three reasons why the Fed won't cut rates at its June meeting
"They don't want to be seen as cowing to any sort of pressure, be it political from the White House or from the market," said Lindsey Piegza, chief economist at Stifel. "The Fed is going to look at the data, they're going to look at what their models say. To them, it doesn't matter what the markets say.
"I can't imagine what they are going to do with the dots," Jeffrey Gundlach, founder of DoubleLine Capital, said in a webcast Thursday. He noted the "big divergence" between the market and Fed projections and said, "No cuts this year is hard to believe." In May, Gundlach recommended a straddle options trade that benefited from wide fluctuations in interest rates. The trade recentlyFed officials have been under intense pressure from more than the markets.
"It's a difficult transition for the Fed now from two rate hikes this year to the pause and now moving closer and closer to rate cuts," said Quincy Krosby, chief market strategist at Prudential Financial. Krosby points to two pivotal events recently that signaled yet another change in policy — remarks from Powell and Vice Chairman Richard Clarida earlier in June that set the groundwork for potential cuts.
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