The Feds caught between a rock and a hard place, one expert says
The Federal Reserve is having a tough time justifying future rate hikes, Quincy Krosby, market strategist at Prudential Financial, said Monday.
"The Fed is caught between a rock and a hard place. They think they want to raise rates, but the economic data here in America is not doing well," Krosby told CNBC's "Squawk on the Street."
The U.S. central bank is scheduled to kick off its second policymaking meeting of 2016 on Tuesday, with several economists and experts expecting interest rates to stay unchanged.
In fact, the market is not expecting the first rate hike until September, according to the CME Group's FedWatch tool.
These two words matter the most to the Fed
"You see the Fed's funds futures markets not seeing a Fed rate hike until perhaps September. Yet, if you look at what economists are saying,
they're thinking the Fed may move a bit closer, a little bit more hawkish to set the possibility of a rate hike; to give them two,
or maybe three this year," Krosby said.
"Financials have been moving higher on the back of yields rising. Yields are rising despite the fact that the Philadelphia Fed was terrible; despite the fact that the first read of GDP for the last quarter is going to be very, very weak."
The U.S. economy is expected to have grown marginally0.6 percentin the first quarter of 2016, economists polled by Reuters said.
Federal Reserve Board Chairwoman Janet Yellen delivers remarks December 2, 2015 in Washington, DC.
THIS could spell trouble for the Fed: Analyst
The benchmark S&P 500 index has gained more than 10 percent since hitting their February 11 lows, but has struggled for gains during this earnings season, gaining just 1 percent since April 11.
"There's been some high-profile company misses, but on balance the word for this earnings season has been 'beat,'" Jeff Saut, chief investment strategist at Raymond James, said in the same interview.
"As of last Thursday, 70 percent of the S&P 500 companies that had reported beat their lowered earnings expectations," he said. "I think earnings are going to come in better than the lowered expectations. So far, this is the best beat rate since the third quarter of 2009."