The labor market data released on Tuesday surprised to the upside, but has a big downside: a more likely Fed rate hike in November.
The lag effects of monetary policy are hard – by definition – to put in the rearview mirror, and as the Federal Reserve has raised interest rates at an aggressive pace to fight inflation those moves have remained core to fears about the eventual effect on the economy and stocks, from a deeper selloff cutting into 2023's gains even more than a down September already has, to a recession.
"I think the risk has increased that the Fed has overshot," he said."I'm not certain whether we're gonna have a hard landing or a soft landing, but I am certain that the probability that we're going to have meaningful slowing in 2024 has gone up." Ackman said on Monday morning he didn't expect another rate hike. But the Labor Department's monthly Job Openings and Labor Turnover Survey released on Tuesday showedthat helped to sink the markets and related to fears that, even if it suggests more surprising strength from the economy, will be a key input for the Fed before its November rate decision.
Rieder added to a chorus of investors pointing to less risky investments as a sweet spot with what many might consider a boring asset class among his favorite current bets. — it could be cutting from a higher level than the market anticipated. And while the market is pricing in rate cuts for next year, Gerstner took that as a bearish indicator as his starting point."The reason the market is pricing in two or three rate cuts next year is because the market is saying the economy is going to be worse than you're currently forecasting."