Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Economy

What would it take for the Fed to hike? BofA weighs in

admin by admin
January 13, 2025
in Economy
0
What would it take for the Fed to hike? BofA weighs in
0
SHARES
9
VIEWS
Share on FacebookShare on Twitter

Investing.com — Bank of America analysts outlined the potential conditions under which the Federal Reserve might pivot back to hiking interest rates following recent strong economic data that has halted the current rate-cutting cycle.

BofA’s Economics team stated that the Fed’s “cutting cycle is over” after stronger-than-expected December payroll figures prompted concerns about inflationary pressures. 

The key question now is the threshold for future rate hikes. 

According to the analysts, “the bar is high since the Fed still thinks rates are restrictive.” 

However, they suggest that rate hikes could be back on the table if “year-over-year core PCE inflation exceeds 3%” or if “inflation expectations become unanchored.”

The impact of rising U.S. Treasury yields is also a point of focus. Since the end of September, 5-year UST yields have risen by 100 basis points, reflecting a robust U.S. economy and persistent inflation, which has kept the Fed on pause rather than cutting rates further. 

BofA notes that while the elevated yields could slightly worsen credit quality, particularly concerning commercial real estate re-pricing, widespread credit deterioration is unlikely if the job market remains strong and GDP growth stays within the 2-3% range.

However, they believe the scenario changes if the Fed is compelled to resume hiking rates to combat inflation. In this case, BofA warns that investors may start pricing in a higher likelihood of a U.S. recession, which could negatively impact bank stocks due to expectations of rising credit defaults.

BofA advises focusing on the “three Rs”—Regulatory relief, Rate backdrop, and Rebounding customer activity—as drivers for bank stock performance in 2025. 

They highlight Wells Fargo (NYSE:WFC) and JPMorgan as well-positioned among money centers, with Goldman Sachs and Morgan Stanley (NYSE:MS) offering exposure to a potential rebound in investment banking.

 

This post appeared first on investing.com

Previous Post

S&P 500 index forecast as bond yields rise, earning season starts

Next Post

EM bond sales top $50 billion in cash dash to beat Trump – and Fed – surprises

admin

admin

Next Post
EM bond sales top $50 billion in cash dash to beat Trump – and Fed – surprises

EM bond sales top $50 billion in cash dash to beat Trump – and Fed – surprises

Trending News

Czech central bank can keep easing, but with eye to inflation spots, rate-setter says

Czech central bank can keep easing, but with eye to inflation spots, rate-setter says

October 24, 2024
Lead Edge Capital founder Mitchell Green says recession is the ‘best time to invest’

Lead Edge Capital founder Mitchell Green says recession is the ‘best time to invest’

April 23, 2025
2025 could be a peak year for Nvidia stock: analyst

2025 could be a peak year for Nvidia stock: analyst

January 16, 2025
Subscribe to Insightful Word


    Recent News

    The Labubu craze: identity, status, and a ₹1.2 crore toy

    The Labubu craze: identity, status, and a ₹1.2 crore toy

    August 6, 2025
    US stocks open in the green as earnings drive stock moves: Nasdaq up 0.3%

    US stocks open in the green as earnings drive stock moves: Nasdaq up 0.3%

    August 6, 2025
    Apple to invest $100B more in US manufacturing amid tariff threats

    Apple to invest $100B more in US manufacturing amid tariff threats

    August 6, 2025
    Is Archer Aviation a good eVTOL stock to buy today?

    Is Archer Aviation a good eVTOL stock to buy today?

    August 6, 2025

    Recent News

    The Labubu craze: identity, status, and a ₹1.2 crore toy

    The Labubu craze: identity, status, and a ₹1.2 crore toy

    August 6, 2025
    US stocks open in the green as earnings drive stock moves: Nasdaq up 0.3%

    US stocks open in the green as earnings drive stock moves: Nasdaq up 0.3%

    August 6, 2025

    Latest News

    • The Labubu craze: identity, status, and a ₹1.2 crore toy
    • US stocks open in the green as earnings drive stock moves: Nasdaq up 0.3%
    • Apple to invest $100B more in US manufacturing amid tariff threats

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.