JPMorgan Strategist: Fed Hikes Likely, Cut Bets Off

0:00JP Morgan's top strategist, Oksana Aranov, is slamming the brakes on talk of Federal Reserve Ray cuts this year. She says the bar for any hikes is sky high right now, with economic growth slowing and hidden risks bubbling up. Traders via the CME Fedwash tool have basically wiped out cuts for 2026, flipping to a 30% chance of a hike by year end. That shift kicked off back in March when oil-driven inflation worries killed off earlier cut bets. The Fed held its target range steady at 3.50 to 3.75% on March 18th, 2026, and Aranov. Argus those prior easings were too soon, fueling excess in private credit. Wall Street's piling on, with McCory eyeing a hike in the December 2026 quarter, Morgan Stanley delaying cuts to September and others, like Goldman Sachs and Barclays pulling back two. Meanwhile, private credits cracking, defaults hitting a record 9.2% in 2025, and big redemption requests overwhelming.

1:00Funds like those from Morgan Stanley and Apollo. Fiscal pressures aren't helping, as the budget deficit balloons to $1.85 trillion in fiscal 2026 or 5.8% of GDP, with Treasury borrowing $574 billion this quarter alone. Other term yields are climbing on supply floods, the Fed can't control easily. Investors, Aranov says, got to stay nimble, ditch old stock bond diversification since they're moving together now, build cash buffers, snag cheap. Credit protection before stress worsens, and stick closer to home. The U.S. looks stronger than Europe amid energy risks. Keep watching those undercurrents. That wraps Durham News Today, brought to you with AI. I'm Corey with the story.