02/15/2023
U.S. stocks closed with the Dow initially up about 40 points, the Nasdaq closed up 0.92% and the S&P 500 closed up 0.28. Investors are still assessing the inflation situation and its impact on Fed policy. Yesterday's CPI data and today's retail sales data both show high inflationary pressures, reinforcing market expectations that the Fed will stick to its hawkish stance. ECB President Lagarde reiterated her intention to raise interest rates by another 50 basis points in March. ECB President Christine Lagarde reiterated the idea of another 50 bps rate hike next month. Given the underlying inflationary pressures, we intend to raise rates by another 50 basis points at our next meeting in March," Lagarde said. We will then assess the subsequent path of our monetary policy, despite the slowdown in inflation for the third consecutive month, but ECB officials are still stressing that soaring prices have not yet been overcome. They are concerned that stubborn underlying price pressures could intensify further as employed people demand wage increases to compensate for falling purchasing power. The U.S. is facing similar challenges, thus raising market bets that the Fed will raise interest rates more often than previously estimated.
