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Sitting at the Pool, Waiting for a Sign, May 30, 2006
Summary: Summer has officially begun and analysts are already waiting for evidence that the economy is slowing down or inflation is heating up. One of those two competing forecasts is likely to prove correct, although it is still unclear which one. Stocks and bonds are, therefore, likely to remain within a trading range until investors gain some clarity.
Summer has officially begun and analysts are already waiting for evidence that the economy is slowing down or inflation is heating up. One of those two competing forecasts is likely to prove correct, although it is still unclear which one. Stocks and bonds are, therefore, likely to remain within a trading range until investors gain some clarity.
Stocks had a particularly rough time for the past few weeks when it seemed that growth was far too strong and the Fed might need to raise interest rates several more times. The equity market recovered a bit last week, when some weaker data appeared. The bond market did not believe in many more rate hikes a few weeks ago and still doesn't. Futures markets are priced for one more rate hike to 5.25% by yearend and no more. This is possible, but smacks of ostrich behavior to me. The economy is...
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This section contains 427 words (approx. 2 pages at 300 words per page) |
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