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Here are the takeaways from today’s Morning Brief. sign up Every morning you will receive the following message in your inbox:
Markets are now very sensitive to any suggestion that there will be no major rate cuts by the Federal Reserve in 2024.
If that investment theory were to smolder, stocks would also be ruined. Who is that driver? Hot economic indicators that exceed expectations are currently being developed.
A week ago, investors had to digest a better-than-expected Consumer Price Index (CPI) report. The market sold off as expectations for a rate cut subsided.
On Wednesday, markets had to read through a retail sales report that suggested consumers remain strong and inflation won’t fall as quickly. As you might imagine, interest rate cut bets were attracted.
After that, stock prices plummeted.
Over the past five trading sessions, the S&P 500 (^GSPC) has declined 0.5%. The interest rate-sensitive Nasdaq Composite Index (^IXIC) is down 1.2%, which I think confirms the market’s bet on a big rate cut this year.
Bank of America CEO Brian Moynihan told Yahoo Finance Live at the World Economic Forum this week that the bank plans to cut interest rates four times in 2024. This is a far cry from the six rate cuts that many markets were pricing in for early 2024. Year.
“And what we’re seeing publicly from policymakers is that they don’t support the idea that there will be cuts in the coming months. I mean, if I were a central banker, I would probably be a little bit more conservative. I’m actually prepared to cut back quickly because the market has corralled itself in favor of a pretty clear statement of how it thinks things are going to go. Until then,” Goldman Sachs chief economist Jan Hatzius reminded us in a chat at Davos.
“People are more optimistic than ever in terms of how they talk about the economy,” Hazzius added.
Mr. Hadsius still expects a rate cut this year, but he is not in the camp of six cuts.
In my humble opinion, this represents a situation with greater than average risks as people try to understand the Fed’s thinking and the data that is coming.
Perhaps you should try adding bonds to your portfolio, experts tell Yahoo Finance Live at WEF.
“Bonds have historically done very well when the Fed paused and started an easing cycle, which is exactly where we are. So if we’re going to go in that direction, bonds, especially Investment grade bonds are going to perform well.”They perform very well in that environment,” said Anne Walsh, chief investment officer at Guggenheim Investment Management.
Read the latest information world economic forum In Davos, Switzerland:
Brian Sozzi I’m the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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