{"id":1652278,"date":"2022-09-22T00:51:33","date_gmt":"2022-09-22T04:51:33","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1652278"},"modified":"2022-09-22T00:52:27","modified_gmt":"2022-09-22T04:52:27","slug":"analysis-no-relief-for-bruised-markets-as-fed-signals-higher-rates-for-longer","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-no-relief-for-bruised-markets-as-fed-signals-higher-rates-for-longer\/","title":{"rendered":"Analysis-No relief for bruised markets as Fed signals higher rates for longer"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-no-relief-for-bruised-markets-as-fed-signals-higher-rates-for-longer%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1652278&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Davide Barbuscia and David Randall<\/p>\n<p>NEW YORK (Reuters) \u2013     A Federal Reserve dead-set on fighting inflation is leaving little hope that this year\u2019s rocky markets will end anytime soon, as policymakers signal rates rises faster and higher than many investors were expecting.<\/p>\n<p>The Fed lifted rates by an expected 75 basis points and signalled that its policy rate would rise by 4.4% by year end and top out at 4.6% by the end of 2023, a steeper and longer trajectory than markets had priced in.<\/p>\n<p>Investors said the aggressive path suggests more volatility in stocks and bonds in a year that has already seen bear markets in both asset classes, as well as risks that tighter monetary policy will plunge the U.S. economy into a recession.<\/p>\n<p>\u201cReality is setting in for the markets as far as the messaging from the Fed and the continuation of this program to move rates higher to get rates into restrictive territory,\u201d said Brian Kennedy, a portfolio manager at Loomis Sayles. \u201cWe don\u2019t think we\u2019ve seen the peak in yields yet given that the Fed will continue to move here and the economy is continuing to hold up.\u201d<\/p>\n<p>Kennedy\u2019s funds continue to focus on short-term Treasuries and are holding \u201celevated\u201d levels of cash as he expects yields on both short- and longer-dated bonds will rise between 50-100 basis points before peaking.<\/p>\n<p>Stocks plunged following the Fed\u2019s meeting, with the S&#038;P 500 falling 1.7%. Bond yields, which move inversely to prices, shot higher with the two-year yield surging above 4% to its highest since 2007 and 10-year yields hitting 3.640%, the highest since February 2011. That left the yield curve even more inverted, a signal of looming recession.<\/p>\n<p>The S&#038;P 500 is down 20% this year, while U.S. Treasuries have had their worst year in history. Those declines have come as the Fed has already tightened rates by 300 basis points this year.<\/p>\n<p>\u201cRiskier assets are probably going to continue to struggle as investors are going to hold back and be a bit more defensive,\u201d said Eric Sterner, chief investment officer of Apollon Wealth Management.<\/p>\n<p>Rising yields on U.S. government bonds are likely to continue dulling the allure of stocks, Sterner said.<\/p>\n<p>\u201cSome investors may look at the equity markets and say the risk is not worth it, and they may shift more of their investments on the fixed income side,\u201d he said. \u201cWe might not see as strong returns in the equity markets going forward now that interest rates have been somewhat normalized.\u201d    <\/p>\n<p>Yields: https:\/\/fingfx.thomsonreuters.com\/gfx\/mkt\/klvykawwrvg\/Pasted%20image%201663800897972.png<\/p>\n<p>Indeed, the average forward price-to-earnings multiple on the S&#038;P 500 stood at around 14 in 2007, the last time the Fed funds rate was at 4.6%. That compares with a forward P\/E of just over 17 today, suggesting stocks may have further to fall as rates rise.<\/p>\n<p>\u201cPowell is drawing a line in the sand and staying very committed to fighting inflation and is not as worried about spillover effects to the economy at this point,\u201d said Anders Persson, chief investment officer of global fixed income at Nuveen. \u201cWe have more volatility ahead of us and the market will have to reset to that reality.\u201d<\/p>\n<p>THINKING \u2018VERY CONSERVATIVELY\u2019<\/p>\n<p>Investors have piled into assets such as cash this year as they seek refuge from market volatility while also seeing opportunity to buy bonds after the market rout.<\/p>\n<p>Many believe high yields are likely to make those assets attractive to income seeking investors in coming months. The shape of the Treasury yield curve, where short-term rates stand above longer-term ones, supports caution as well. Known as an inverted yield curve, the phenomenon has preceded past recessions.<\/p>\n<p>\u201cWe\u2019re trying to essentially determine where the curve is going,\u201d said Charles Curry, managing director, senior portfolio manager of U.S. Fixed Income at Xponance, who said his fund has been thinking \u201cvery conservatively\u201d and owns more Treasuries than in the past.<\/p>\n<p>Peter Baden, CIO of Genoa Asset Management and Portfolio Manager of US Benchmark Series, a collection of U.S. Treasury ETF products, said higher yields at the short end of the Treasury yield curve were attractive. At the same time, rising recession risks also raised the allure of longer-dated bonds.<\/p>\n<p>He likened Powell\u2019s stand on inflation with that of former Fed Chairman Paul Volcker, who tamed higher consumer prices in the early 1980s by drastically tightening monetary policy.<\/p>\n<p>\u201c(Powell\u2019s) saying we will do what it takes. They need to put the brakes on demand and put that back in line with supply. This is their Paul Volcker moment,\u201d he said.<\/p>\n<p> (Reporting by Davide Barbuscia and David Randall; Additional reporting by Megan Davies and Chuck Mikolajczak; Writing by Ira Iosebashvili; Editing by Megan Davies and Sam Holmes)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/analysis-no-relief-for-bruised\/a-trader-works-on-the-trading-floor-at-the-new-11\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/tagreuters.com2022binary_LYNXMPEI8L04W-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI8L04W-BASEIMAGE\" \/><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/analysis-no-relief-for-bruised\/a-trader-works-on-the-trading-floor-at-the-new-12\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/tagreuters.com2022binary_LYNXMPEI8L04Y-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI8L04Y-BASEIMAGE\" \/><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/analysis-no-relief-for-bruised\/a-trader-reacts-on-the-trading-floor-at-the-new\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/tagreuters.com2022binary_LYNXMPEI8L04Z-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI8L04Z-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Davide Barbuscia and David Randall NEW YORK (Reuters) \u2013 A Federal Reserve dead-set on fighting inflation is leaving little hope that this year\u2019s rocky markets will end anytime soon,<\/p>\n","protected":false},"author":66,"featured_media":1889127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1652278","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_finder_url":"https:\/\/www.oann.com\/analysis-no-relief-for-bruised\/?utm_source=rss&utm_medium=rss&utm_campaign=analysis-no-relief-for-bruised","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1652278","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1652278"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1652278\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1889127"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1652278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1652278"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1652278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}