Bloomberg News reports that Marko Kolanovic of JPMorgan Chase & Co. agrees with the other strategists of Wall Street that believe the aggressive hiking cycle in the interest rates, which is the most in decades, is gradually coming to an end.
The Slowdown of Interest
From the European Central Bank, there has been a change in the tone. According to it, fiscal stress is about to fade in the United Kingdom. In Canada and Australia, there might be a slowing down of the interest rates, which will foster optimism that by early 2023, the tightening cycle prevailing globally could come to an end.
The JPMorgan chief global market strategist and his team members wrote a note to the clients. The monetary policymakers in the United States could likely increase the rates by 50 basis points in December. After that, it is likely to pause after another rate hike by 25 basis points in the first quarter of the coming year, as revealed by the strategist.
Until recently, Marko was one of the bull vocals on Wall Street despite the current year’s decline of 19% in the S&P 500 Index. He was found turning more skeptical towards the beginning of this month, sliming the risk allocations in the model portfolio of JPMorgan.
Bloomberg News reports that slowing down the pace of tightening does not necessarily mean that the central banks of the globe will let up their inflation fights, as warned by the strategists. The ECB had signaled that as far as combating record inflation is concerned. It is making progress as it has doubled the key interest rates.
What is the Rebound for?
It was found that optimism related to the potential slowdown in tightening the Fed has fostered a rebound of late. It is anticipated that the Fed might increase the interest rates by as much as 75 basis points for the fourth time it meets on November 2nd. The outlook of the meeting is expected to be less specific since the traders are viewing a toss of the coin between a 50 basis and a 75 basis point hike in December.
The comments of Kolanovic are just an echo the comments of the chief US equity strategist of Morgan Stanley, Michael Wilson. Wilson has written that the indicators that include inversion of the curve between three and 10-year Treasury yields seem to support a Fed pivot sooner instead of one that will take place later. On Monday, the S&P 500 Index was just 0.7%, paring the October advance, as the stocks of the big techs are found to slide, and yields from bonds escalate.
