Fed rate cut trajectory is a hot topic on earnings calls
The Federal Reserve is a hot topic this week for global investors trying to time interest-rate cuts. It’s also — unusually — a prominent feature on Corporate America’s post-earnings conference calls.
As data flash mixed signals about US growth, market participants are struggling to figure out the path for Fed rate cuts beyond the September meeting. US policymakers face pressure to unwind elevated rates even as inflation holds above pre-pandemic levels and threatens to stifle consumer spending.
The words “Federal Reserve” were on track to be mentioned about 380 times on second-quarter calls with analysts, according to a Bloomberg analysis of transcripts of S&P 500 and Stoxx 600 companies. That would be the highest tally ever in the database’s records going back to 2001, if the current pace holds.
The central bank’s impact on economic growth is “a huge factor” for Corporate America right now, said Neil Birrell, chief investment officer at Premier Miton Investors.
“It might be they’re just noticing the early signs of a consumer slowdown and what purchasing managers are doing, and they could be giving the Fed a nudge,” Birrell said. “If we don’t get a rate cut soon, the balance of risks will shift from escaping inflation to avoiding an economic slowdown.”
In a statement on Wednesday, Fed Chair Jerome Powell signaled central bank officials are on course to cut interest rates in September unless inflation progress stalls, citing risks of further labor-market weakening. Policymakers held the federal funds rate in a range of 5.25% to 5.5%, a level they have maintained since last July.
In an example of just how crucial the Fed has become for consumer behavior, homebuilder PulteGroup Inc. flagged that it expects to deliver more
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