The Federal Reserve isn’t done tightening the screws on the economy -- and doesn’t care what that does to your portfolio.
These kinds of disruptions previously saw Fed officials in the bull-market years rush to the airwaves to calm rattled nerves, effectively conditioning investors to buy dips. That mentality juiced risk rebounds in March and June even as the central bank stepped up its battle against inflation. Fed officials Thursday again hammered home their intention to keep tightening until inflation comes down, markets be damned -- more or less.
The action marks a notable shift for the once-faithful retail army and adds to a growing list of evidence on extremely bearish sentiment that’s often cited as a key reason why a market bounce is on the horizon. Last time when they were selling this aggressively in March 2020, stocks bottomed one week later.
“Recent wild swings have been driven by policy makers pursuing confusing, irrational, and/or just plain bad economic policies,” said Chris Senyek, chief investment strategist at Wolfe Research, referring to the turbulence experienced in fixed income, currencies and commodities of late. “Don’t jump back into stocks until FICC markets stabilize.”
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