Post by account_disabled on Feb 26, 2024 23:54:14 GMT -6
The releases of key economic data were neither too hot nor too cold, but perfect, like the porridge that the brave young hero of the same name tasted in the story. The employment and inflation numbers were bright enough to suggest that the U.S. economy, in particular, was successfully weathering the Federal Reserve's blistering campaign of interest rate hikes, and dull enough to suggest that the bank The central bank may not need to do much more before inflation returns. your box. Now, summer is over, tans are fading, and investors have remembered that at the end of the Goldilocks story, a little girl is scared to death by hostile animals that chase her into the woods. Sure, the girl eats some oatmeal, breaks a chair, and briefly exercises her squatter rights in a cabin in the woods, but in the end, the winners in this tale are the bears. The same thing happens in the markets. August produced the first monthly decline in the benchmark S&P 500 index since February, and the first few days of September have been weak on both sides of the Atlantic. We have reached, wrote strategist Bhanu Baweja and his colleagues at UBS, “Peak Goldilocks.
The price of oil contributes to stoking nerves. Brent crude surpassed $90 a barrel this week for the first time since November, after Saudi Arabia and Russia said they would extend supply cuts. That benchmark is now Jordan Mobile Number List up a quarter since June, reigniting concerns that the specter of inflation has eased but not disappeared. Suddenly, the story investors tell themselves to help understand what fickle markets are doing has changed. Should this matter? You could say no. But when everyone is trying to detect how and when growth and high inflation will give way to an elusive US economic slowdown, it does. “It is a narrative-driven market,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International. You are viewing a snapshot of an interactive chart. This is most likely because you are not logged in or JavaScript is disabled in your browser. In recent months, the mainstream narrative has focused on a soft landing, in which central banks manage to control inflation without burning jobs or causing a serious economic setback.
Certainly, this year's pessimists were wrong. The United States has comfortably dodged recession and stock markets have risen, defying consensus expectations of a decline. Ahmed is happy to admit that he made the same mistake, having in June abandoned his call for a recession in 2023. But he remains convinced that the damage caused by the Federal Reserve's aggressive series of interest rate hikes will come. . Until now, growth-focused stocks and the risky parts of corporate bond markets (still supported by excess liquidity in the financial system and enthusiasm around artificial intelligence) have been operating as if rate increases that we have seen so far won't really matter. It's hard to imagine that can last forever, particularly when all those shakier companies that feasted on cheap money after the Covid pandemic come to refinance that debt at higher rates in the next year or two. Disturbingly, the pain is already evident in Europe, where stocks have stagnated and the euro has been slowly falling against the all-conquering dollar for weeks. “Europe is at an interesting time and in a complicated situation,” said Gustavo Madeiros, head of research at Ashmore.
The price of oil contributes to stoking nerves. Brent crude surpassed $90 a barrel this week for the first time since November, after Saudi Arabia and Russia said they would extend supply cuts. That benchmark is now Jordan Mobile Number List up a quarter since June, reigniting concerns that the specter of inflation has eased but not disappeared. Suddenly, the story investors tell themselves to help understand what fickle markets are doing has changed. Should this matter? You could say no. But when everyone is trying to detect how and when growth and high inflation will give way to an elusive US economic slowdown, it does. “It is a narrative-driven market,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International. You are viewing a snapshot of an interactive chart. This is most likely because you are not logged in or JavaScript is disabled in your browser. In recent months, the mainstream narrative has focused on a soft landing, in which central banks manage to control inflation without burning jobs or causing a serious economic setback.
Certainly, this year's pessimists were wrong. The United States has comfortably dodged recession and stock markets have risen, defying consensus expectations of a decline. Ahmed is happy to admit that he made the same mistake, having in June abandoned his call for a recession in 2023. But he remains convinced that the damage caused by the Federal Reserve's aggressive series of interest rate hikes will come. . Until now, growth-focused stocks and the risky parts of corporate bond markets (still supported by excess liquidity in the financial system and enthusiasm around artificial intelligence) have been operating as if rate increases that we have seen so far won't really matter. It's hard to imagine that can last forever, particularly when all those shakier companies that feasted on cheap money after the Covid pandemic come to refinance that debt at higher rates in the next year or two. Disturbingly, the pain is already evident in Europe, where stocks have stagnated and the euro has been slowly falling against the all-conquering dollar for weeks. “Europe is at an interesting time and in a complicated situation,” said Gustavo Madeiros, head of research at Ashmore.