By: Gerald Sparrow President & Founder, Sparrow Capital Management, Inc.
Wall Street is always searching for a hero to embrace or a villain to blame. And right now, Fed Chair Jerome Powell is the villain.
After the September Fed meeting, Powell said interest rates may be heading higher for longer than anticipated and that “no one knows whether this process will lead to a recession, or if so, how significant that recession will be.”
But a closer look at available data suggests a different story.
In the chart below, we see that traders expect short-term rates to peak next year and perhaps trend lower by the end of 2023, which could mean that Wall Street is prepared to see its “villain” as a “hero” when the Fed tames inflation.
We know this year has had its ups and downs. Just when it appears to have turned a corner, something else happens, and the markets are under pressure again.
But I’m optimistic that the Fed has a plan, and I’m looking forward to the day when Fed Chair Powell has good news to share.
PHOTO CREDIT: https://www.shutterstock.com/g/pabrady63
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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalized investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.