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Maria Kenny
Mar 13, 2023 1:21PM ET
Fed will increase next week.
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Goldman no longer expects Fed to raise rates this month; futures surge
© Reuters Goldman no longer expects Fed to raise rates this month; futures surge
By Senad Karaahmetovic
Futures are trading sharply higher in Monday's pre-open trading after U.S. regulators announced measures to tackle the consequences of the collapse of SVB Financial Group (NASDAQ:SIVB), which was closed due to systematic risks.
The Federal Deposit Insurance Corporation (FDIC) has moved in quickly to protect uninsured depositors in two bank resolutions - Silicon Valley Bank and Signature Bank (NASDAQ:SBNY). Moreover, the Fed and Treasury also announced the Bank Term Funding Program (BTFP), aimed at providing additional liquidity.
"We expect these measures to provide substantial liquidity to banks facing deposit outflows and to improve confidence among depositors," a Goldman Sachs economist wrote in a client note.
Given the most recent developments, Goldman Sachs no longer expects the Fed will increase rates at next week's meeting. The bank sees "considerable uncertainty about the path beyond March."
"We have left unchanged our expectation that the FOMC will deliver 25bp hikes in May, June, and July and now expect a 5.25-5.5% terminal rate, though we see considerable uncertainty about the path."
The S&P 500 futures are up 1.6% in pre-market trading while Nasdaq and Dow Jones futures are trading 1.7% and 1.15% higher, respectively.
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Comments (26)
G D
Mar 13, 2023 7:38AM ET
Economists yet again showing the only reason they even have jobs in the first place is because the people they're advising to are even dumber than they are.
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Brad Albright
Mar 13, 2023 7:32AM ET
Providing money to cover deposits is not "printing" new money, it's maintaining existing money.
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Jouni
Mar 13, 2023 7:32AM ET
Where you think that 'provided' money comes from? They print it.
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Brad Albright
Mar 13, 2023 7:29AM ET
"a Goldman Sachs economist wrote in a client note." Why the anonymity? Please take a journalism class.
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Kerry Drake
Mar 13, 2023 7:08AM ET
The Feds created this whole problem because of Covid 19. Pumped up the markets, handed out free monies, now it's time to take their money back by crashing the markets and treasury bonds. Net break even for them, investorrs big losses.
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Bipin Kochar
Mar 13, 2023 4:12AM ET
Given that the SVC mess was due to the Fed rate hikes, the pause is definitely required.
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Otb Investor
Mar 13, 2023 4:01AM ET
Are we Fed up and Brandoned out yet?
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Prabhat Negi
Mar 13, 2023 3:49AM ET
haha wait till the cpi prints above 6.2 .. and then the real drama starts ... people will forget svb in a month but not inflation. choose your positions carefully
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Korhan Ekinci
Mar 13, 2023 3:49AM ET
They wont make it above 6.2 ;)
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Eduard Sekyra
Mar 13, 2023 3:20AM ET
FED decided to fight inflation by printing money (Bail-outs are back !) and it would be fun to see how the Wells Fargo will go. But maybe after clients lost funds due to "glitch" they will still believe in Big heads cheaptalk so no bank run on WF...
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Jeremy Sklenar
Mar 13, 2023 3:19AM ET
BTFP.. Fabricated some new words.. So they didn't have to use the bailout word.. Just another bailout of all banks needing it.. Jerome needs to resign NOW!!!
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