Bank of America: inflation is 'unambiguously worse,' three Fed hikes coming
Bank of America now expects the Federal Reserve will deliver three rate hikes this year.
Wall Street's most influential research desks are tilting hawkish despite the oil pullback. Bank of America now expects the Federal Reserve will deliver three rate hikes this year, telling clients inflation is "unambiguously worse" than the central bank's forecasts assumed, CNBC reported. The bank cited a wave of war-driven energy pass-through and the new tariff regime as forces likely to keep core inflation elevated well into 2027.
CNBC's Daily Open dispatch reported a rotation out of megacap technology stocks Monday even after the Iran sanctions waiver eased supply worries. The 10-year U.S. Treasury yield slipped 2 basis points to 4.481 percent, per CNBC's market snapshot, but Goldman's hedge-fund desk told CNBC that last week's hawkish Federal Open Market Committee meeting left investors with "heightened ambiguity regarding the forecast for short-term interest rates."
Reuters' homepage flagged that traders are "grappling with rising expectations the Federal Reserve may take more aggressive action to tackle inflation later this year," per its Tuesday summary. Investors are watching new Fed chair Kevin Warsh closely. The New York Times reported that in former chair Alan Greenspan, Warsh has "saw a Fed chairman role model" — a tilt that consumers may feel in higher mortgage and credit-card rates if his Fed delivers the hikes Bank of America is now forecasting. Thirty-year mortgage rates are climbing back to 6.53 percent, The Wall Street Journal reported Monday, reversing some of last week's relief.
Tariff refund chaos lands in federal court — and the White House appeals
Two weeks after the Supreme Court struck down President Trump's sweeping global tariffs, the refund of $166 billion in collected duties is heading toward federal court. A U.S. Customs and Border Protection official is set to testify Tuesday in federal court about the agency's plans for refunds, with The Associated Press tariffs hub reporting that "as US Customs refines its tariff refund system, who gets in to apply is under dispute."
The administration is not letting the refund order stand. President Trump "plans to appeal order allowing all importers that paid struck-down tariffs to seek refunds," the AP reported, even as businesses big and small have already started receiving refunds. Affected importers range from small retailers to multinationals — but the question of which companies pass refunds along to consumers, and which keep the windfall, remains unanswered. Few large companies have committed publicly to sharing the 166 billion dollars with shoppers.
The fight comes as the administration tries to rebuild the tariff wall by other means, leaning on Section 301 forced-labor probes and proposing 10 percent or higher duties on imports from 60 trading partners.
U.S. Trade Representative Jamieson Greer arrived in India Tuesday to "resolve trade pact hurdles," Bloomberg reported, as Asian capitals press for terms better than their neighbors. Meanwhile a Bloomberg newsletter warned British retailers are "bracing for fallout" from a new 3-euro EU e-commerce fee, plus a 2-euro handling charge, after Brussels abolishes its 150-euro de minimis exemption July 1 — a foreshadowing of similar U.S. moves that would raise the cost of Shein and Temu orders for American shoppers.
