Expectations of early interest rate cuts are high, especially as recession signals are set to rise through Q1 2024. Will Central Banks stay the course and normalise interest rates, or will be take the easy option of further low interest rate distortion?
Bond Markets are a wonderful thing to behold in full rally mode, but expectations of a swift return to lower rates depend on Central Banks playing ball, and nothing else changing. Experience shows things change quickly re inflation, rates and markets!
Markets thrive on competing perspectives, but trends after the strongest narrative. Rather than pray for early rate cuts to boost prices, maybe we should figure out what would be best for the economy?
Volatility in Treasury markets is setting off Global alarms. Economic numbers and earnings present a mixed picture of what’s occurring in terms of rates and inflation projections, but the reality is markets are highly vulnerable to rising uncertainty!
Who wins from atrocity in Gaza? UK wages are still rising, but the threat is no longer wage spiral inflation, but job losses and a crash landing as the lag effects of rates rises, inflation and consumer spending create a perfect slough of despond.
The threat list to global markets lengthens, but the Truth will be found in the bond markets. Like inflation and rising rates, the effects of a bond market slide are lagging – It’s going to take other financial assets time to catch up on the bond crash!
Who are we trying to fool? Rising bond yields, higher for longer rates, recession fears, crashing consumption, yet stocks believing earnings could still push them higher? Are we at risk of a realisation moment and a repeat of 1987 or maybe something worse?
The Bank and The Fed have served notice they will remain vigilant – higher for longer! Markets would be wrong to expect early easing. Wage Inflation and Energy remain very real threats over the medium term – it may trigger volatility as markets understand the new reality.
It’s been a “meh” year for the UK markets, but they’re marginally up on the year. The outlook for a rusted economy, crashing discretionary spending, and an imminent housing collapse looks bad. As the UK electoral cycle kicks into high gear.. markets are in favour of change.
Are global economies heading for a soft or crash landing? Why the Republicans seeking to impeach President Biden have just played a brilliant short-term political hand, and what the ARM IPO tells us about gullibility in bubble times.