The dash for trash has hit a speed bump. Stocks faltered again this past week as the early-year rally, led by rebounds in 2022’s speculative-grade losers, ran into resistance from higher expected interest rates from the Federal Reserve in the wake of persistent inflation readings and few signs that growth is faltering.
Economists at an array of major Wall Street banks, including Goldman Sachs, Bank of America, and Citigroup, lifted their forecasts of the eventual peak in the central bank’s target range for the overnight federal-funds rate, to 5.25% to 5.50%, effectively bringing them in line with the fed-funds futures market. Deutsche Bank now is expecting a 5.6% single-point peak, up a half-percentage-point from its previous estimate, and among the highest forecasts.
