Recession? Who cares! Deutsche Bank shares Goldman’s bullish stocks view as banks split on downturn.

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Happy Fed decision day to all who observe. After Tuesday’s as-expected inflation numbers, the market has settled on the idea that the Fed will skip a rate hike at the meeting, and according to market strategist Charlie Bilello, the Fed has done exactly what markets expected at every meeting since 2009.

Wall Street banks are updating their targets for the year as the calendar turns toward the summer solstice. The latest comes from Deutsche Bank, the first Wall Street bank that called for a recession, back in April 2022.

“We have consistently argued over the last 2-3 years that the U.S. is heading for its first genuine policy-led boom-bust cycle in at least four decades. The inflation we see was induced largely by expansive fiscal and monetary policy, and the aggressive rate hikes needed to tame that have now materialised. Avoiding a hard landing would be historically unprecedented,” said David Folkerts-Landau, chief economist.

That recession view is echoed elsewhere, so much so that Folkerts-Laundau mused whether the bank should now take a contrarian, more optimistic stance on the economy. “However, things are going to script for our Q4 recession timeline. We’ve been careful not to bring it forward as monetary policy works with a lag and U.S. consumers are still winding down excess pandemic savings. These will not be depleted until nearer year end.”

What’s notable however is that Deutsche Bank also is sticking to its call for the S&P 500?SPX,?+0.69%?to reach 4,500 — the same near-the-top-of-the-Street outlook as Goldman Sachs,?which says the U.S. should avoid a recession.

Read:?MarketWatch’s round-up of Wall Street S&P 500 views

That’s even as Deutsche Bank has pointed out another catalyst has played out, with investor positioning more or less back to normal. “If earnings remain robust, so will buybacks, and equities should continue to grind higher,” the German bank says.

Bond yields, meanwhile, won’t go much lower even as recession arrives because of the higher-for-longer stagflationary world, they say. They see the 10-year U.S. Treasury at 3.35% by the end of the year.

The markets

U.S. stock futures?ES00,?0.07%?NQ00,?0.02%?edged higher before the Fed decision. The yield on the 10-year Treasury?TMUBMUSD10Y,?3.807%?was 3.81%. The dollar?DXY,?-0.40%?slipped.

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