![]() ![]() Investors should be more concerned with the effect that rising rates into a decelerating economy has on their portfolio values rather than the current level of inflation.” “We are preparing for an environment where interest rates remain higher for longer.Michael Landsberg, chief investment officer, Landsberg Bennett Private Wealth Management:.“Today’s CPI report showed some moderate improvement as some of the previously elevated excessively high inflation-drivers, such as used cars, started to decline at a faster pace.”.Rick Rieder, chief investment officer of global fixed income at BlackRock Financial Management Inc.:.Swaps markets pulled back bets on a peak rate to slightly less than 4.9 per cent in the first half of next year, from more 5 per cent before the CPI data. San Francisco’s Mary Daly said the moderation was “good news,” but noted “pausing is not the discussion, the discussion is stepping down.” ![]() They also stressed the need for policy to remain tight.ĭallas Fed President Lorie Logan said it may soon be appropriate to slow the pace to better assess economic conditions. “A 0.5 per cent hike, rather than 0.75 per cent, in December is clearly on the cards but, until we have had a run of these types of CPI reports, a pause is still some way out.”įed officials appeared to back a downshift in rate hikes after a stretch of four jumbo-sized increases. “The first downside surprise in inflation in several months will inevitably be received by an equity market ovation,” Seema Shah, chief global strategist at Principal Asset Management, wrote. Rates traders downgraded the odds of another three-quarter-point rate increase in December almost to nil, while continuing to price in a half-point hike. Treasuries soared, sending the rate on two-year notes, more sensitive to monetary policy, down 28 basis points. The S&P 500 is still down 17 per cent and the Nasdaq 100 is off nearly 30 per cent, with both headed for their worst years since 2008. Thursday’s intense rally only partially claws back steep losses for risk assets hammered this year by the Fed’s tightening. More important for the Fed, the core measure that excludes food and energy slowed more anticipated. Headline inflation came in at 7.7 per cent, the lowest since January, before Russia’s war in Ukraine pushed up commodity prices. Sign up to get breaking news email alerts sent directly to your inbox.The sentiment shift also helped crypto markets stabilize despite the turmoil surrounding crypto exchange FTX. The rally caught short-sellers wrong-footed, helping spur the outsized gains. More than 90 per cent of stocks in the benchmark were in the green. The S&P 500 climbed 5.5 per cent for the best first-day reaction to a CPI report since at least 2003 when records began. Stocks surged in a buy-everything relief rally as slower-than-projected price growth spurred bets the Federal Reserve can downshift its aggressive rate-hike path. ![]()
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