Stocks and bonds surged before the Fed announcement, as data showed inflation slowed more than expected in May. That meant traders increased their bets the Fed will cut rates twice this year, even after the central bank’s dot plot shifted to estimate only one, quarter-point reduction for 2024, rather than the three previously pencilled in.
Investors shed their fears of a hawkish Federal Reserve, according to Bloomberg’s latest Markets Live Pulse survey, signalling that slower inflation means a soft landing remains in play.
More than half of the 97 respondents to the survey said the 14% surge in the S&P 500 during 2024 will extend regardless of what the Fed does, with nearly a quarter saying central bank easing is needed for stocks to thrive. Investors were even more certain Treasuries will extend their rebound, with 62% forecasting what would be a second-straight annual gain. The Bloomberg US Treasury Index notched a decline of at least 0.8% year-to-date as of June 12.
