Om Wall Street hoppas att recessionshotet ska få centralbanken att svänga är det sannolikt önsketänkande
Det är rimligt att tro att höjningstempot kommer sänkas framöver men det betyder inte att Fed svänger helt.
Felicia Åkerman DI 28 juli 2022
https://www.di.se/nyheter/det-luktar-onsketankande-fran-investerarnas-sida/
More hikes ahead — all the way to a fed funds rate of 3.75%!
And yet, the stock market has staged a humongous rally
‘‘We are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle until now we will be much more data-dependent going forward.’’
But that also means any further increases are going to put the Fed in an actively restrictive territory.
And the bond market knows that every time the Fed became restrictive in the past, they ended up breaking something.
MarketWatch 28 July 2022
Are Interest Rates at Neutral? Markets Certainly Hope So
I have no precise estimate for neutral... I have a hunch, but am far from certain, that we are still below it.
Mohamed A. El-Erian Bloomberg 28 juli 2022
https://englundmacro.blogspot.com/2022/07/are-interest-rates-at-neutral-markets.html
Powell said that the path toward a soft landing has narrowed
The question is whether there is any such path.
The central bank’s choices boil down to this: Does it try to curb demand gradually (which risks letting high inflation get entrenched) or abruptly (which risks a severe recession and much higher unemployment)?
You’d think that lower demand could trim the number of vacancies and reduce that pressure without causing more people to lose their jobs. The problem is that it never seems to work that way.
Before the pandemic, the study says, this so-called natural rate of unemployment was probably about 3.6% — equal to the current rate. Now it’s 4.9%, conservatively estimated. If this is correct, the Fed can’t expect unemployment to stay put as it brings down inflation.
As it continues to restrain demand, the Fed should expect — and shouldn’t be deflected by — higher unemployment.
Clive Crook Bloomberg 29 juli 2022
The problem is that the Fed can’t declare victory merely because inflation has fallen from 9%.
If again it turns out that we haven’t yet reached peak inflation or that inflation stabilizes far above the Fed’s 2% target, bond yields could easily shoot back up.
Recession fears would rise, earnings estimates fall and stocks would be hit
James Mackintosh WSJ 27 July 2022
https://www.wsj.com/articles/the-hail-mary-for-investors-11658909167
Kommentarer