Nervous Investors Return to Risk Assets…But Economy Remains too Strong??
January 19, 2024
By Mitchell Anthony
Investor’s hunger for high returns has driven liquidity back to risk assets despite nervousness about the direction of interest rates. Risk assets have performed like a yoyo over the last year as expectations for inflations have been up and down with changing economic data. There are no clear answers to some obvious questions that are on the mind of investors regarding the need for lower inflation? Will employment soften and will consumption decelerate? Investors are clearly hoping for weaker economic data that will support lower interest rates, friendlier fed policy, and as a result higher asset prices. Given the rise in interest rates that we have experienced it is only natural to think that consumption and employment will soften leading to sustained lower inflation. However this has not occurred yet and consumers continue to spend. While many investors worry there is something terribly wrong with the economy and a bust is on the horizon , the real problem is that the economy has too much underlying strength. Softer growth will be great news for stocks and bonds.Read more
