Today’s Economic Shakers

Morgan Stanley beats on earnings, stock rises in pre-market trading…

Investment banking giant Morgan Stanley reported earnings before the bell, and the numbers beat estimates across the board.

The bank reported that it saw a gain in revenue to $9.75 billion, a substantial rise above the $7.79 billion that was reported in the same quarter for 2016.

That number was a sizeable beat above analyst expectations, with a survey conducted by Thomson Reuters forecasting a consensus $9.27 billion.

Morgan Stanley also beat expectations on earnings, coming in at $1 per share, above analyst predictions of $0.88 per share.

The investment bank reported that it saw a profit of $1.93 billion for Q-1 2017, a significant improvement over the same quarter for last year, when the banking industry was in the middle of a sector downturn.

At that point, the company posted a profit of $1.13 billion with earnings of $0.55 per share.

According to the earnings report, Morgan Stanley posted a high 10.7% return on equity, which left the bank on track to meet its 2017 forward guidance.

The big banks have now all reported for Q-1, with Wells Fargo, Bank of America and JPMorgan Chase all posting numbers that beat expectations.

Goldman Sachs, on the other hand, saw a reversal of fortune, with its own first quarter results missing expectations by a great enough margin that investors have driven the stock’s price down by about 5%.

Morgan Stanley saw its stock gain by about 2% in pre-market trading on Wednesday.

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Odds of Federal Reserve hiking rates in June falling fast as low inflation causes concern...

Traders seem to be shifting their expectations from bullish to bearish in terms of expectations of a Fed June rate hike.

Financial data firm Bloomberg conducted a survey of traders this week, and the results showed that expectations for an interest rate hike in June, which would be the second of the year by the Fed, has dropped from 60% at the start of April all the way down to 44%.

The survey’s sentiment is reflected in 2-year Treasuries, which tend to be the most responsive vehicle to the Fed’s next interest rate intentions.

Accordingly, those Treasuries are experiencing a rally now running to its second consecutive month.

The shift in sentiment among investors, in terms of the next rate hike by the Fed, comes primarily from the recent government data that showed that inflation had unexpectedly dropped following a string of monthly gains.

Additionally, some economists are seeing cracks in the economy, as indicated by last month’s weak gains in the jobs market.

The Fed’s dual mandate consists of both maintaining low levels of unemployment as well as keeping inflation at a low but steady rate of around 2%.

Though the jobs market has been robust enough to keep unemployment below 5%, March’s reversal of the recent trend of strong jobs numbers seems to have contributed to the lowered expectations of a June Fed rate hike.