The US Federal Reserve is now expected to make one only interest rate cut this year, down from expectations of at least two or three rate cuts this year, amid persistent concerns about the lingering inflationary pressures, according to a new Financial Times-Chicago Booth economist poll. Over half of the 39 polled academic economists forecast a single 25-bps cut in 2024, while a quarter of the analysts anticipate no cuts at all. The forecast comes as the Fed wraps its two-day June meeting today.

With only four meetings left in the year, “rapid-fire” cuts in the current climate are unlikely, economists say. “The Fed’s narrative is going to be very similar to what we’ve been hearing: ‘We’ve made progress bringing down inflation; we’re not in a hurry to cut rates,’” Nathan Sheets, a former senior economist at the Fed, currently global chief economist at Citi, told the Associated Press.

The key data everyone is waiting for: US inflation figures will be out today, ahead of the Fed’s “dot plot,” which will set expectations for the rate cuts to come. Inflation fell to 3.4% in April.

When will the Fed deliver the cut? A third of the polled economists anticipate the Fed pulling the trigger on the first cut in September, the Fed’s final meeting before the presidential elections. Investors are also banking on the Fed to begin cutting rates in September as well, according to the CME FedWatch Tool.

Traders are already unwinding their positions on a rally following the meeting, as investors price in just one cut this year, Bloomberg reports. Yields on 10-year notes have also climbed near 4.48% earlier this week.

Economists’ optimism for a soft landing for the US economy has also increased, with 52% of FT’s poll respondents now predicting that the US will not fall into a recession until 2026 or beyond, compared to 46% in March.

MARKETS THIS MORNING-

Asian markets are once again mixed as investors mull inflation data out in China, as well as expectations of inflation data from India and the US later today. Hong Kong’s Hang Seng and Japan’s Nikkei both opened lower, while South Korea’s Kospi was up 0.45%. Wall Street futures are little changed as traders await the Fed’s decision today.

TASI

11,775

-0.7% (YTD: -1.6%)

MSCI Tadawul 30

1,473

-0.9% (YTD: -5.0%)

NomuC

26,848

+0.3% (YTD: +9.5%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

6% repo

5.5% reverse repo

EGX30

26,082

+0.7% (YTD: +4.8%)

ADX

9,000

+0.1% (YTD: -6.0%)

DFM

4,009

+0.9% (YTD: -1.3%)

S&P 500

5,375

+0.3% (YTD: +12.7%)

FTSE 100

8,148

-1.0% (YTD: +5.4%)

Euro Stoxx 50

4,965

-1.0% (YTD: +9.8%)

Brent crude

USD 81.92

+0.4%

Natural gas (Nymex)

USD 3.11

-0.7%

Gold

USD 2,333.00

+0.3%

BTC

USD 67,298.30

-3.4% (YTD: +59.1%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.7% yesterday on turnover of SAR 11.5 bn. The index is down 1.6% YTD.

In the green: Mihaona (+10.0%), Cenomi Retail (+9.4%) and Chemical (+8.6%).

In the red: Bahri (-3.3%), Acwa Power (-2.7%) and Srmg (-2.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 187.6 mn. The index is up 9.5% YTD.

In the green: Osool and Bakheet (+10.3%), Naseej Tech (+10.0%) and Keir (+3.1%).

In the red: Alqemam (-6.8%), Food Gate (-6.7%) and Meyar (-5.4%)

CORPORATE ACTIONS-

Shareholders of Tadawul-listed Tanmiah Food approved paying SAR 38 mn in dividends for FY 2023 at SAR 1.9 per share, it said in a disclosure to Tadawul. The distribution date is set for Thursday, 4 July.

Eligible shareholders of national shipping company Bahri will cashout on dividends of SAR 0.55 apiece for FY 2023 on Monday, 1 July, Bahri said in a disclosure to Tadawul. This comes a week after shareholders approved the board’s recommendation on a dividend payout of SAR 406 mn.

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