FX Evolution: Is Everyone Missing THIS…
Markets may be making a shift this week. Over the past 18 months, there have been six-month periods of strength in the markets. However, stocks have then been shaken up by the combination of big tech earnings and a Federal Reserve meeting.
With investors still looking at the potential for significant interest rate cuts this year, markets are still poised to head higher. However, other trends could be in play that impact markets negatively.
In February 2023 and July 2023, we had the combination of tech earnings and a Fed meeting in the same week. In both cases, stocks sold off heavily. They then made a multi-month rally to new highs.
This week’s data and mixed earnings increase the likelihood of a selloff over the next few weeks. The good news? With markets at overbought levels, a pullback would be healthy here. And it would clear the market to trend even higher.
Additional data, such as payrolls and inflation, could give markets a further reason for the boost of interest rate cuts in the months ahead.
With inflation slowing and with consumer debt rising, it’s possible that economic conditions could shift quickly. And central banks may end up lowering rates faster than they expect in the latter half of the year.
For now, conditions suggest some caution here in the weeks ahead, with the potential for a further rally in the spring.