Ray Dalio says watch out for rates reaching this level, because Wall Street stocks will take a 20% hit

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Ray Dalio says watch out for rates hitting this level, because Wall Street stocks will take a 20% hit

After that CPI shock earlier in the week, Wall Street is bracing for a fresh batch of data including retail sales, on Thursday, with a deepening yield curve inversion between 2- and 10-year bonds giving off ever gloomier economic signals. There’s good news though, as a disastrous rail strike may be averted.

There’s no cheering up billionaire investor and hedge-fund manager Ray Dalio who in our call of the day asserts the Fed has no choice but to keep driving up interest rates, at a high price to stocks. But Dalio thinks interest rates could even reach the higher end of a 4.5%-to-6% range. “This will bring private sector credit growth down, which will bring private sector spending, and hence the economy down with it,” he says.

The markets Stock futures ES00 YM00 NQ00 are inching up, with Treasury yields TMUBMUSD10Y TMUBMUSD02Y climbing and the dollar DXY easing up some. Apart from August retail sales, we’ll get weekly jobless claims, the Philly Fed and Empire State manufacturing indexes and import prices. Industrial production and business inventories will follow.

 

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