Economists continue to lower their odds for Fed rate cuts in the near term. Many now expect fewer rate cuts for the year than they had originally forecast. On Friday, one prominent economist even predicted the Fed “will not cut rates this year and rates are going to stay higher for longer.”
A popular view is that rate cuts would be bullish for risk assets like stocks. So developments that lower the odds of rate cuts in the near term would therefore be bearish. All other things being equal, this view makes sense.
Yet the stock market has trended higher amid these developments, with the S&P 500 rising to another record high on Friday — its 15th record high this year.
