Investors Expect Aggressive Fed Cuts. BlackRock and Barclays Say They’re Wrong.

The market is pricing in aggressive interest rate cuts by the Federal Reserve, but two major investment firms say that’s a mistake.

BlackRock and Barclays both released reports this week arguing that the Fed is unlikely to cut rates as much as the market expects.

The market is currently pricing in three rate cuts by the end of the year, but BlackRock and Barclays both believe that only one or two cuts are likely.

BlackRock’s chief investment strategist, Russ Koesterich, wrote in a report that the Fed is likely to be “patient” in cutting rates.

“The Fed is not going to cut rates aggressively,” Koesterich wrote. “They are going to be very cautious about cutting rates too much, too quickly.”

Barclays’ chief U.S. economist, Michael Gapen, wrote in a report that the Fed is likely to cut rates only once or twice this year.

“The Fed is not going to cut rates as much as the market expects,” Gapen wrote. “They are going to be very data-dependent, and they are going to be very cautious about cutting rates too much.”

The market’s expectations for aggressive rate cuts are based on the belief that the economy is slowing down and that the Fed needs to cut rates to prevent a recession.

However, BlackRock and Barclays both argue that the economy is not slowing down as much as the market believes.

“The economy is still growing,” Koesterich wrote. “It is not slowing down as much as the market believes.”

“The economy is still on a solid footing,” Gapen wrote. “It is not slowing down as much as the market believes.”

BlackRock and Barclays both believe that the Fed is likely to be patient in cutting rates because they do not believe that the economy is slowing down as much as the market believes.

If BlackRock and Barclays are correct, then the market is likely to be disappointed by the Fed’s rate cuts this year.