📝Data Might Discourage Fed From Delivering Large Rate Hike In September: BMO

The back-to-back contraction of GDP will feed the debate about whether the U.S. is in, or soon headed for, a recession. The fact that the economy created 2.7 million payrolls in the first half of the year would seem to argue against an official recession call for now. But the more important point is that the economy has quickly lost steam in the face of four-decade high inflation, rapidly rising borrowing costs, and a general tightening in financial conditions. The economy is highly vulnerable to slipping into a recession. That might discourage the Fed from ramming through another large rate hike in September. However, until inflation subsides, further rate hikes are in the cards. And they clearly won't reduce the odds of a real recession. - BMO Capital Markets