Wall Street Brunch: Is That It For Fed Rate Cuts?

Wall Street Breakfast5.74M FollowersSubscribe5ShareSaveCommentsSummaryThe Fed is expected to hold rates steady amid surging oil prices and rising inflation expectations, with markets now pricing in minimal cuts for 2026.Updated Fed projections may reflect stagflation risks: higher inflation forecasts, softer GDP, and a modest uptick in unemployment through 2027.Micron Technology (MU) reports Wednesday; strong DRAM pricing boosts Q2, but guidance and industry cyclicality are key for future trajectory.Meta (META) considers major layoffs to offset AI investment costs, while Tesla (TSLA) launches in-house semiconductor production to address supply constraints. LD/iStock via Getty Images Listen below or on the go via Apple Podcasts and Spotify Fed meeting on tap with swaps priding in just 20 bps of ’26 cuts. (0:17) Micron earnings expected to show strong DRAM pricing. (1:48) Meta reportedly considers layoffs as AI spending pressures operating costs. (2:36) The Fed begins its two-day policy meeting Tuesday, with a rate decision due Wednesday. But the economic backdrop looks dramatically different from a month ago. Oil has surged amid the Iran conflict, inflation expectations are climbing, and yields are rising. WTI crude futures (USO) are indicated to open above $100 this week — up from just above $63 a month ago — after U.S. strikes on Iran’s key export facility at Kharg Island intensified fears of supply disruption. Meanwhile, the 10-year Treasury yield has climbed roughly 20 basis points over the past month to 4.28%. For this meeting, markets are pricing in a near certainty that rates stay on hold. And with energy prices spiking, traders are no longer convinced we’ll see meaningful rate cuts this year — even with chair nominee Kevin Warsh pushing the White House agenda for lower rates. Interest rate swaps tied to Fed meeting dates imply only about 20 bps of easing by year-end, according to Bloomberg data. Fed funds futures still show about a 60% chance of at least one quarter-point cut by December. Wall Street economists remain somewhat more dovish. Goldman Sachs now expects the first cut in September, but still sees 50 bps of easing by year-end. Wells Fargo also projects two quarter-point cuts, though it cautions that the longer oil stays elevated, the harder that becomes to achieve. This meeting will also include an updated Summary of Economic Projections – AKA the dot plot. Wells Fargo expects it to tilt modestly stagflationary: slightly higher inflation forecasts extending into 2027, softer GDP projections, and a modest uptick in unemployment expectations for 2026 — while the median rate dot likely stays unchanged. Just three S&P companies report this week, but one of them is Micron Technology (MU) — and sparks tend to fly when chipmakers issue numbers. Analysts expect fiscal Q2 EPS of $8.66 on revenue of $19.18B when Micron reports Wednesday, with results boosted by soaring DRAM prices and operating leverage. The real focus will be third-quarter guidance. Seeking Alpha analyst Jonathan Weber notes that while memory pricing tailwinds remain strong, industry cyclicality and potential overinvestment could temper future growth. Beyond this year, Micron’s earnings growth is projected to slow — with EPS expected to rise about 35% next year before flattening out. Also on the calendar: Dollar Tree (DLTR) reports Monday. Lululemon (LULU) on Tuesday. Tencent (TCEHY) joins Micron Wednesday. And Alibaba (BABA) and FedEx (FDX) round out the week on Thursday. In the news this weekend, Meta Platforms (META) is reportedly planning widespread layoffs that could affect 20% or more of its workforce, as it looks to offset the cost of its aggressive artificial intelligence investments and drive efficiency gains from AI-assisted employees. According to Reuters, no date has been set and the scope of the cuts has not yet been finalized. Meanwhile, Elon Musk says a project enabling in-house semiconductor production for Tesla (TSLA) will launch in a week. In a post, Musk said the “Terafab” project launches in seven days — marking the start of what could be a multibillion-dollar effort aimed at easing supply constraints and reducing geopolitical risk. And for income investors, American International Group (AIG), Meta (META) and Merck (MRK) all go ex-dividend on Monday. AIG pays out on March 30, Meta on March 26, and Merck on April 7. Kohl's (KSS) goes ex-dividend Wednesday, with an April 1 payout.This article was written byWall Street Breakfast5.74M FollowersSubscribeWall Street Breakfast, Seeking Alpha's flagship daily business newsletter, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices) and is published before 7:30 AM ET every market day.

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