Markets Rally Despite Central Banks’ Warning of More Interest Rate Hikes
Despite the U.S. Federal Reserve halting its aggressive interest rate cycle this week and hinting at more hikes in the near future, stock markets continue to witness a red-hot rally. The S&P 500 share index has crossed into a bull market, and MSCI’s broad gauge of world stocks is heading for a 2.9% weekly gain. The market rally seems to be feeding on itself, though there are warnings of more Fed hikes potentially causing renewed stress on the banking sector.
Investors Inclined Toward Growth Trades
With traders pricing in less than a 70% chance of another interest rate rise in July, fixed income portfolio managers are turning to growth trades in high yield bonds and emerging market debt. Professional investors are left with the choice of either trading in a narrative they might not fully agree with or missing out on potential gains.