State Street Global: Fed may cut interest rates by 50 basis points in June

According to ChainCatcher news, State Street Global Advisors deviated from the recent increasingly hawkish consensus in the market and is betting that the Federal Reserve will cut interest rates by 50 basis points as early as June.

The institution, which manages $3.6 trillion in assets, believes the Federal Reserve will cut interest rates ahead of the U.S. presidential election in November. By the end of the year, the firm expects the Fed to cut interest rates by a cumulative 150 basis points, which is 2.5 times what the market is currently pricing in.

A string of strong U.S. economic data, including last Friday's better-than-expected U.S. non-farm payrolls report, and comments from hawkish officials that the Fed may not need to cut interest rates at all, have fueled a repricing of easing expectations and pushed U.S. Treasury yields to four Month high.

However, State Street Global maintains that the U.S. economy is not as strong as it appears, with indicators such as credit card default rates and small business credit costs pointing to a possible downturn later this year.