Art Cashin says the Federal Reserve can’t go back to higher rate hikes after easing. “They made the mistake, if you will, of starting to slow down. They went from 50 [basis points] back to 25. If you accelerate again, if you go back to 50, the market knows that there’s a good chance you’ve made a mistake. It’s a kind of “uh oh” movement. So they’re going to move heaven and earth not to have to accelerate again,” UBS Financial Services director of floor operations said Friday in an appearance on CNBC’s “Squawk on the Street” side. Three 25s, maybe even four 25s. The Fed is in here at a psychologically difficult point to re-accelerate,” Cashin continued. That follows Thursday comments by Raphael Bostic, the Atlanta Fed president, who said he is “firmly” in favor of rate hikes of 25 basis points, rather than the raise of 50 basis points from another Fed officials have called for. Stocks reacted favorably to those comments, with all three major averages on track for a positive week. Regardless, Cashin said he expects trouble for the markets, and urged urged investors to keep an eye on some technical levels a break from the 4.10% level in 10-year Treasury yields, as well as the 4,025 level in the S&P 500. “It looks to me like the oversold bounce we got out of Salesforce yesterday, the impact on the market could continue until maybe Tuesday of next week,” Cashin said. “And then I think we go back to put pressure on the market and retest lows.”
Art Cashin on why the Fed can’t go back to massive rate hikes
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