What’s moving the markets?

Good market vibes.

Positive earnings, lower inflation and the cooling job market combine to adjust the market’s forecast of further Federal Reserve interest rate hikes. As the root of recent market turbulence was based in the bond market’s expectations of further tightening and/or an extended period of these higher rates, this shift in market perspective matters significantly. Slowing inflation and a slowing job market support the increasing chances for a “soft landing”: lower inflation without a recession due to tighter monetary policy. 

A significant amount of investor funds are also being held in money market accounts right now. As investors follow on into the market now that the difficult summer/fall period has morphed into a year-end rally, the market could be pushed higher as well.

Bond market stabilizes.

The bond market has had a couple of years that most investors would like to forget. Some good times may be in the offing as the markets are indicating that peak rates are here, and the future direction of rates are more likely headed lower. The drop in bond values investors have seen over the last couple of years may start to recover as rates are expected to decline in the near future.