Both inflation and employment more resilient than had been thought - hard landing, a soft one, or none at all?
Will the economy make a hard landing, a soft one, or none at all?
Both inflation and employment more resilient than had been thought. Markets have to calibrate a response.
How they do so will ultimately be driven by sentiment — how they feel about the data they’re seeing
The most important example of late is the Federal Reserve’s pivot in the last quarter of 2023 /October/ toward reducing rates.
Without ever making any concrete changes to its monetary policy, Jerome Powell’s change in tone shifted sentiment in the market, brought rates on bonds and mortgages down, and sparked a great rally for the stock market that is only now petering out.
Money managers are also sentimental.
How sentiment has shifted on what has become the core question of the last year — will the economy make a hard landing, a soft one, or none at all?
A soft landing has fewer adherents now than at any time since the BofA started asking, while no landing is favored by 36%.
The smart money is now ready and protected against inflation (or at least thinks it is), but still more exposed to the US stock market than is healthy.
S&P 500 is now down more than 4% from its high, should we begin to get worried?
After a bad week so far for equities, questions about market valuations are back with a vengeance.
John Authers Bloomberg 18 april 2024
It looks like we’re headed toward a soft landing, but ...
A soft landing - possible but unlikely
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