Fed officials and economists expect interest rates to stay high next year, with reductions unlikely until 2024.
played a major role in moving markets in 2022, driving a campaign of monetary tightening as it tried to combat inflation that hit multi-decade highs.
Fed officials and economists expect rates to stay high next year, with reductions unlikely until 2024. But that doesn't mean the Fed will remain the primary driver of the markets. Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, sees different financial drivers retaking the reins. "Bond yields are giving you a real return now, above inflation. So it's a reasonable place to put capital now, whereas at the start of this year it didn't make much sense. It was hard to expect a return above inflation where yields were."was at 3.856% on Friday, a rapid climb from 1.628% at the start of 2022. The yield on the benchmark note hit an all-time low of 0.55% in July 2020. Bond yields move inversely to prices.
Armstrong did suggest that the U.S. may be "flirting with recession probably by the end of the first half of next year," but noted that "it's a very strong job market there, wage growth and consumption is 70% of the U.S. economy, so it's not even sure that the U.S. does fall into recession."
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