Investors are looking at how the rate hike is affecting US markets.
(Photo: AP)
New York, Frankfurt After the US Federal Reserve (Fed) hiked interest rates for the first time since 2018 on Wednesday, investors are trying to gauge the fallout. Will Fed Chair Jerome Powell achieve a “soft landing”, i.e. a normalization of monetary policy, without pushing the economy into recession? Everything depends on that.
A look at US bonds shows that rates for five-year and ten-year paper are close together at a good 2.1 percent. An “inverse” pattern, where long-term yields are below short-term yields, is considered a sign of a recession.
Joe Davis, chief investor at the US fund company Vanguard, believes that the markets are showing too negative a scenario. In his opinion, we are currently experiencing an economic structural break that will lead to higher real returns in the long term.
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