Powell Fails to Shift Traders' Expectations for Aggressive Fed Rate Cuts This Year
• Powell tried to convince traders that their expectation of up to 6 rate cuts this year is flawed, but they largely brushed him off • Traders continue to expect 6 quarter-point rate cuts by December, bringing the rate to 3.75%-4% from current 5.25%-5.5% • Powell wanted to correct expectations for so many cuts, but it didn't work as this has happened repeatedly before • Markets seem poised for a repricing if cuts don't materialize, with downside risk for equities and potential earnings downgrades • Traders may be more sensitive to economic weakness than the Fed, which remains more worried about upside inflation risks