As the weekend comes to a close, let’s take a look at the top stories that shaped the week. From a former senator’s skepticism about President Joe Biden’s tax proposal to the Fed’s inflation indicator, here’s a quick recap of the key events that unfolded.
Former Senator Dismisses Biden’s Capital Gains Tax Proposal
Former Democratic senator, Heidi Heitkamp, has expressed doubts about the likelihood of President Joe Biden’s proposed 44% capital gains tax passing. The proposal, part of the Fiscal Year 2025 Budget, aims to raise long-term capital gains and qualified dividends rates to 37% for taxpayers with taxable income above $1 million.
Fed’s Key Inflation Indicator Hits 2.8%
The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditure (PCE) price index, surged beyond expectations in March. This development has further dampened hopes of a Federal Reserve rate cut, which had already been dwindling in recent weeks. Market-implied probabilities now suggest a 60% chance of a rate cut by September 2024, with only one rate cut priced in by year-end.
See Also: S&P 500, Nasdaq Futures Climb Higher: Will Tesla Earnings Spark Rally Or Retreat?
US Economy Grows 1.6% In Q1
The U.S. economy experienced slower growth in the first quarter of the year, falling slightly below economists’ predictions. The Gross Domestic Product (GDP) annualized growth rate for the quarter stood at 1.6%, as per the advanced estimates released by the Bureau of Economic Analysis.
Goldman Sachs Predicts Steady Inflation Decline
Despite recent unexpected inflation increases, Goldman Sachs economist Jessica Rindels has forecasted a downturn in the core Personal Consumption Expenditure (PCE) Inflation for the rest of the year. Rindels attributes the re-acceleration to transient factors that are expected to diminish.
Treasury Yields Reach 5-Month High
As Treasury yields continue to rise, reaching levels not seen since November 2023, the impact on the U.S. mortgage market and potentially the broader economy is becoming increasingly pressing. The yield on the 30-year Treasury note climbed 5 basis points, reaching 4.78% by mid-morning in New York, on track to close at its highest level since Nov. 6, 2023.
Image by Chris Yunker via Flickr
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