Stocks in for Wild Trading Week as Economic Data Tests Fed's Rate Cut Resolution

investing.com:

It will be a strange week, given the calendar’s lunar eclipse on Monday and the market’s closure on Friday. Add to that a PCE report on Friday, the day the market is closed, and a Jay Powell interview on the same day.

I can’t see why Jay Powell would opt to interview on the same day as the PCE report and when the market is closed. It seems odd. I also can’t see why the market should be closed on the same day as a significant economic report. I get it is a holiday, but it is not a federal holiday, so data from the government will be released regardless of the market calendar.

The PCE report is expected to show a gain of 0.4% in February, up from 0.3% m/m in January, and a rise of 2.5% y/y from 2.4% last month. Core PCE is expected to drop to 0.3% from 0.4% m/m and is in line with the previous month at 2.8% y/y.

It is pretty tough to say that the slowing in inflation has continued on the core PCE with the second month in a row above 0.2%.

If the estimates come in as expected, it would push the 3-month rate of change up to 3.5% from 2.6% and the 6-month rate of change up to 2.9% from 2.5%. This is probably why Atlanta Fed Governor Bostic was out on Friday and now only sees one rate cut in 2024, down from his previous expectations of 2.

This is pretty much what the Fed has done the entire cycle since they first started raising rates in March 2022, which was to overpromise and under-deliver. The Fed, in its dot plots as rates were rising, also seemed to be low, and those dots just continuously rose throughout 2022 and 2023 until they finally hit the end of the cycle.

At this point, it seems like the Fed is promising more rate cuts than what is likely to be given and that, over time, they will continue to walk those rate cuts