Markets are betting the Fed will scale back its hawking a bit more

Good morning. This is Jason Ma in Los Angeles filling in for Phil Rosen today. Markets have high hopes that the Fed will see the latest slowdown in inflation and ease its tightening cycle with a smaller rate hike.

Falling gasoline prices have played a major role in cooling inflation, but global energy markets remain volatile amid Russia’s war with Ukraine.

Let’s jump.

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Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee.

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee.

Samuel Corum/Getty Images

1. You can probably forget about another 75 basis point rate hike by the Fed. So far this year, the central bank has raised benchmark rates four times, starting with 25 basis points, rising further to 50, and finally two 75 basis point hikes in June and July.

Investors are now betting that the Fed will moderate it, with the next rate hike will be 50 basis points when the FOMC meets in September. Fed funds futures show investors believe the odds of another 75 basis point hike have narrowed significantly.

“The market is saying, ‘Financial conditions may tighten in the short term.’ The Fed will be on hold until the end of 2023, when it will end up cutting interest rates,’” Marc Chandler, managing director of Bannockburn Global Forex, told Insider.

Wharton Professor Jeremy Siegel said a one-half point raise followed by two quarter-point raises should allow the Fed to meet market expectations.

Hopes for a less aggressive US central bank added to growing optimism for a turnaround in equities. the the bear market in stocks is almost over, according to Fundstrat’s Tom Lee, who reiterated his view that “buying the dip” is back in style. Meanwhile, the so-called market fear indicator fell to its lowest level since April as Risk appetite among stock investors Returned

In other news:

The man takes a photo of the prices at a gas station.

Guy Benhamou sends a photo of gas prices to his friends as he fills up at an Exxon Mobil gas station on June 9, 2022 in Houston, Texas.

Brandon Bell/Getty Images

2. US stock futures rise early Thursday, after data showed US inflation cooled off sharply in July. Meanwhile, cryptocurrencies have risen, with bitcoin trading above $24,500. These are the latest market movements.

3. In the file: Illumina, Canada Goose and Rivian are all reporting. Also, look for the US Producer Price Index, which is expected to be released by the Bureau of Labor Statistics later this morning.

4. Morningstar said the tide is turning for bank stocks. Rock-bottom interest rates previously weighed on lenders, but the Fed’s tightening cycle is improving their earnings prospects. Here are 14 bank stocks trading at a deep discount to fair value.

5. US gas prices are below $4 a gallon for the first time since March. That’s according to GasBuddy, which pointed to rising supplies and concerns about a slowing economy. But gasoline prices could soon rise again as global oil supplies remain relatively low..

6. European natural gas jumped on Wednesday. Prices are near record highs again as countries fill inventories ahead of winter while Russia continues to tighten supplies. Now, a drop in the Rhine River to crisis levels threatens freight transport.

7. Two former JPMorgan traders have been convicted of manipulating metals markets. It comes after a month-long trial in a practice seen on Wall Street known as “spoofing.” Click here for the latest news and to find out what “phishing” is.

8. BMO’s chief investment officer says stocks still have a lot of upside. That’s because there won’t be a recession, according to Brian Belski, who sees falling inflation and strong corporate profits. He and his colleagues chose these 30 buy-rated stocks.

9. Investing in multi-family properties offers financial benefits. Insider spoke with two real estate investors who are financially independent of their rental portfolios. If you’re interested in investing, here’s why a multi-family home can be a fantastic “entry level” step.

Brent Crude Prices

Brent Crude Prices

Market insider information

10. Oil prices have fallen more than 20% in the last two months. West Texas Intermediate is down 28% since the beginning of June, while Brent crude is down 24% at the time. The three Rs are to blame: recession fears, Russian resilience and shrinking demand.

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Curated by Jason Ma in Los Angeles (comments? email

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.

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