The Fed will spark an economic crash by delaying rate cuts, State Street equity research chief says

Economic Outlook - The economy is likely to enter a downturn if the Federal Reserve delays cutting interest rates, as warned by Marija Veitmane, head of equity research at State Street Global Markets [1][2] - Delaying interest rate cuts can lead to significant economic problems, with a predicted scenario of "no landing then a crash" [2][3] Interest Rates and Corporate Impact - Higher interest rates are already affecting economic strength, with AAA long-term corporate bond yields rising to 5.28% in April, leading to increased debt refinancing costs for companies [2][3] - Companies in consumer sectors, such as Starbucks, are reporting weak quarterly performances, indicating strain from elevated borrowing costs [3] Consumer Behavior - Higher borrowing costs are impacting consumers, with commercial bank rates on credit cards reaching 21.6% in February, the highest in at least 30 years [3] - Retail spending is declining as consumers are "pinching pennies," reflecting a shift in consumer behavior due to economic pressures [3] Market Expectations - Markets are anticipating the Federal Reserve to maintain current interest rates in the upcoming policy meeting, with investors now expecting only one or two rate cuts for the year, down from six at the beginning of the year [4]