continues to post a high return when set against historical calendar-year results. Encouraging, but it’s still premature to dismiss the view that the market remains in a bear-market rally.
As investors weigh the risk-free return in government bonds against the higher but far more volatile and uncertain ex-ante performance in equities, the case has strengthened for trimming equity allocations. Meanwhile, there’s fresh support for thinking that the end of the rate hikes by the Federal Reserve has arrived. Fed funds futures, for instance, are pricing in a path over the next several meetings that leaves the current 5.25%-to-5.50% target rate unchanged.Offsetting the optimism is the Israel-Hamas conflict, along with the continuing uncertainty linked to the war in Ukraine.
One reason for adopting a relatively neutral stance on the equity risk outlook: trend activity looks middling at the moment, based on CapitalSpectator.com’s Sentiment Momentum Index.