Growing concerns about inflation amid high interest rates
“We must acknowledge and adapt to the high interest rate era.”
Market Watch reported experts’ forecasts on the 24th (local time), saying that the New York stock market is facing various risk factors, including the Federal Reserve’s (Fed) interest rate hike policy, re-acceleration of inflation, and federal government shutdown. .
While the Federal Reserve maintains its policy of raising interest rates, the expanding strike of the United Auto Workers (UAW) and the rising oil price trend are raising concerns about inflation again. Additionally, Market Watch explained that although the possibility of a U.S. government shutdown and the resumption of student loan repayments could slow economic growth, they will not be enough to change the Fed’s stance.
In relation to the fact that the Federal Reserve froze the base interest rate on the 20th but hinted at the possibility of raising interest rates once within the year, JP Morgan Chase noted that the outlook for stocks to be weak is receiving real support. He also added that the period from September to mid-October is usually a time of seasonal weakness.
Christian Hoffman of Thornberg Investment Management noted that after the Federal Reserve’s announcement, market-reflected interest rates rose and both stock prices and bonds fell, creating an environment where there were more losers than winners.
As of the 22nd, all three major U.S. indices closed down for four consecutive days. As the Chicago Mercantile Exchange (CME) Fedwatch predicted a 40.7% chance of an interest rate hike in December, U.S. Treasury yields closed at a level close to the highest in 12 years, becoming a limiting factor in the stock market’s rise.
“We are not going back to an era of low interest rates any time soon, and the best way to approach the new paradigm of long-term high interest rates is to acknowledge and adapt to it,” said Gregory Daco, chief economist at EY Pantheon.
“There are big questions about earnings season, which starts in mid-October,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “In order to see a significant upward trend, companies’ performance will have to increase to a meaningful level,” he said.
“With inflation, interest rates, and corporate performance concerns in the U.S., it is important for investors to invest in non-U.S. stocks, especially in countries like Japan and India that are not aggressively raising interest rates,” he added.
However, some experts maintained an optimistic stance.
“It’s not necessarily a terrible thing for the Fed to keep interest rates high for too long,” said Jeffrey Cleveland, chief economist at investment management firm Payden & Rygel. “He mentioned.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.