7 Monster Stock Market Predictions: Bullish U.S. Dollar Spells Bear Season Coming
If last week were all about and the first half of the Fed’s dual mandate, this coming week would be all inflation and the other half of the Fed’s mandate.
From an inflation standpoint, the Fed’s goal has been met, and that is unlikely to change anytime soon. Following Friday’s strong jobs report, the Fed is just about where it needs to be from an employment standpoint. It is close enough that I think the Fed is likely to tell everyone at Jackson Hole the economy has made substantial further progress, which is the first hint that a taper is coming at the September meeting.
But the initial reaction by the market on Friday was clear. Yields rose sharply, spreads widened, pushing dramatically higher. This put a big bid into the reflation sectors as investors sensed a taper was coming, and low rates would be a thing of the past. Nothing is that simple, though, because not every sector will be a winner, especially if the dollar…