Wall Street strategists have warned that the Federal Reserve could raise interest rates at both its December and January meetings, a stance that departs from the easing path many investors had priced in. The mechanism at work is inflation repricing feeding into the policy rate outlook: stronger-than-expected price pressures push up expected terminal rates, which lifts Treasury yields and compresses the present value of future equity earnings, with the effect concentrated in long-duration growth stocks. The S&P 500 is the most directly exposed benchmark, since its valuation is sensitive to discount-rate moves and its rate-sensitive sectors, including technology, real estate, and utilities, typically underperform when front-end rate expectations rise. Traders will be watching the next Consumer Price Index release and the subsequent Fed funds futures repricing, as a hot inflation print would validate the hike scenario and likely pressure the index further, while a softer reading could reduce the probability of back-to-back increases.
WALL STREET WARNS FED COULD HIKE RATES IN BOTH DECEMBER AND JANUARY
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