Read also: Stocks and bonds are out of balance. factory orders dropped 2.1% in July, marking the first decline after four months of gains. That’s not to say there will not be a slow down - just that the year-end slowdown will be “shallow and short-lived,” according to the note from Goldman’s chief economist Jan Hatzius. The chances of a recession in the coming 12 months dropped to 15% from a call of 20% odds in July and 35% chances in March. Treasury yields rose on Tuesday, with yield on the 10-year Treasury noteĭespite the headwinds, the chance of an upcoming recession keeps narrowing, according to Goldman Sachs. The next Fed meeting on interest rates is scheduled for Sept. “There is nothing that is saying we need to do anything imminent, anytime soon, so we can just sit there wait for the data,” Waller said in a CNBC interview. “The consumer is going be paying more, certainly for gasoline, but diesel is a hidden tax on the consumer, which is used for all the goods and services that are being purchased,” Lipow said.įederal Reserve governor Christopher Waller, a key proponent inside the central bank on pushing interest rates higher, said Tuesday the Fed can afford to see what happens next. The countries announced the cuts through the end of the year instead of re-evaluating on a monthly basis, he noted. Tuesday’s news caught Wall Street by surprise, he said. Whatever the impact, it’s not going to help consumers pinched by rising costs, said Andrew Lipow, president of Lipow Oil Associates. The result could be a bump back to higher inflation–albeit nothing like the year-over-year highs reached last year, Engelke added. “What does this do to inflation fundamentals?” he said. The investor question after the supply cut news is how higher energy costs filter into prices and the Federal Reserve’s efforts to tamp down on increases, Engelke said. “Today is all about oil and interest rates,” said Kent Engelke, chief economic strategist and managing director of Capitol Securities Management. Read: Energy stocks lead S&P 500 again, as Saudi Arabia, Russia extend crude-supply cuts Was the best performing sector among S&P 500 stocks, up 0.5% on Tuesday, while most other sectors were in the red. West Texas Intermediate crude for October delivery and November Brent crude both rose after the news. At the same time, Russia is extending its own crude supply cuts. The country’s official press agency reported the supply cut. August jobs numbers that economists said could be regarded as a just-right amount of job growth.īut on Tuesday came word that Saudi Arabia is extending a production cut of 1 million barrels a day for three months. Last week, the S&P notched its biggest weekly gain since June on the heels of the U.S. Investors returned Tuesday from the Labor Day holiday in a generally risk-off mood after upbeat Friday close.
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