Too many factors to interfere with! Investors who bet the Fed will cut interest rates aggressively this year could be disappointed.
In recent months, investors and analysts have been ramping up bets on U.S. interest rate cuts this year after the Federal Reserve signaled it was considering easing monetary policy.
However, BlackRock, the world's largest asset management company, does not think soThe asset manager expects investors who are betting that the Federal Reserve will cut interest rates aggressively this year may be disappointed
BlackRock analysts, led by Jean Boivin, noted in a weekly noteThe Fed may not cut interest rates as the market expects, as inflation will come later this year** and a tight labor market will allow wage growth to accelerate again.
In addition,Increased geopolitical risks will also exacerbate the pressure in the coming years, reducing the room for the Fed to ease monetary policy. Geopolitical tensions tend to affect the global commodity chain, leading to fluctuations in raw materials.
After the Federal Reserve has raised interest rates by more than 500 basis points, the annual inflation rate in the United States in November last year has exceeded 9The 40-year high of 1% fell to 31%。According to BlackRock,Inflation growth is likely to slow further to 2% in the coming quarters, but it will be later this year.
UBS had expected the Fed to cut rates four times this year as part of its base case, while NatWest Markets expected the Fed to cut rates by more than 200 basis points this year.
This anticipation pervades Wall Street drove a strong November and December month and the bond market, with the S&P 500 14% over the same period.
However, according to BlackRock,The market may be a bit rushed。Boivin wrote:
"We believe that even if economic growth slows, the Fed may not be able to deliver the rate cuts that the market expects. As spending volatility caused by the pandemic subsided, U.S. goods*** dragged down inflation. However, as can be seen from December's employment data, a tight labor market is driving high wage growth. ”Boivin also noted that this will mean, as the drag on commodities subsidesInflation will return to near 3% in 2025In addition, geopolitics** will also exacerbate inflationary pressures in the coming years.
As inflation continues to slow, the asset manager saidThe current optimistic trend is likely to continue in the short term, but it could change once the pressures show signs of picking up.
The strategists wrote, "As the persistence of inflation becomes clearer," the strategists wroteVolatility in the bond market is likely to increase