Some people wonder why the Federal Reserve is in such a hurry to raise interest rates, pointing out that growth in the world’s first economy is hesitant at best. Inflation, of course, is an issue — even the stripped-down official version of inflation, “core” as they like to call it, is rising.
There is a widespread view that the Federal Reserve will have to raise interest rates at a steady pace this year, because it cannot afford to fall behind the curve.
I would argue that it has already fallen behind the curve and has no choice but to remain there. And it is not the only one in this situation. All major central banks are playing the same game; they have no choice.
By Mirela Roman
While central bankers are stepping deeper into territory they have never tried before (negative IR, QE), markets and also the public want solid proof that they Walk the Talk.
Global stock markets serve as a brutal reminder that nothing can ever be taken for granted when investing.
After the carnage in the stock markets — it was the worst start of the year ever for U.S. stock markets — a look at capital flows can give some clues on where the markets might be headed next.
Bearishness increased for the short term (a one to two weeks horizon) while intermediate-term bullishness on US stock markets has tempered, flows data around the first interest rate raise by the Federal Reserve in nearly a decade show.
Investors are extremely bearish for the short term, just before a crucial decision by the Federal Reserve on whether it would raise interest rates or not later this week.
Exchange traded fund (ETF) traders have been positioning “aggressively” for a Santa Claus rally, but contrarian investors would say this is a negative thing for the short-term market outlook, according to analysts at TrimTabs Investment Research.
Easy credit has led to all sorts of distortions in the markets, and an obvious one has been the surge in share buybacks, which have kept stock prices elevated and have boosted earnings per share.
Investors seem to ignore the approaching of the first interest rate hike since the financial crisis by the Federal Reserve, with the mood in the markets brightening.