Is the Fed Asleep at the Wheel?
Despite a great jobs report, a huge rally in the regional banks on Friday, and a higher 10-year interest rate, the US dollar sold off. The reaction of the US dollar suggests that many of the concerns that have been plaguing the market have yet to reach their crescendo and that the full impact of the Federal Reserve’s interest rate hikes and the debt ceiling have yet to be fully priced in by investors.
In this week’s update, we will review what the narrowing of stock market breadth may mean for investors while assessing the impact of the regional bank crises on Federal Reserve interest rate policy and, what we believe to be, the expected impact on asset prices.
- We believe the top of the market is getting crowded as the rest of the market narrows
- Lower rates may be required in order to ease the banking crises
- Gold and other commodities may benefit from a Fed pivot and lower growth
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