Wall Street closed lower, marking the end of a tumultuous week dominated by an unfolding crisis in the banking sector, with investors now guessing how much the Federal Reserve will hike interest rates next week
Investors now turn their gaze to the Federal Reserve's two-day monetary policy meeting next week.
In view of recent developments in the banking sector and data suggesting a softening economy, investors have adjusted their expectations regarding the size and duration of the Fed's restrictive interest rate hikes. "This mini banking crisis has increased the chance of recession and accelerated the slowdown timeline for the economy," Pursche said. "It's natural that the Fed should re-examine its course of action, but it's still very clear that while inflation is slowing it's still very much a concern and needs to be brought under control."
At last glance, financial markets have priced in a 60.5% likelihood that the central bank will raise its key target rate by 25 basis points, and a 39.5% probability that it will let the current rate stand, according to CME's FedWatch tool.
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