The stunning start to the year on equity markets isn’t great news for short sellers, investors who’ve missed the rally and central bankers led by Jerome Powell.
P 500 is up 6.4 per cent and the Nasdaq is up a stunning 11.9 per cent – is making three groups decidedly uncomfortable.Federal Reserve chairman Jerome Powell won’t love the rally we’ve seen to start the year.Consensus held that the first half of the year would be tough, with weak earnings and slowing economic growth pushing economies into or close to recession, and sending equity markets lower before a recovery later in the year.
The second group feeling decidedly uncomfortable with all this is central bankers, who have been trying to tell markets for the past 12 months they must stay the course to slay inflation. No one would be more uncomfortable than Federal Reserve chairman Jerome Powell, who will deliver the Fed’s latest rate decision this week.Fed will slow its hiking cycle by lifting rates by 0.
But suddenly Powell has a problem. The sharemarket rally sparked by expectations of rate cuts in the second half of 2023 – the bond market sees official rates coming down by about 0.5 per cent – means financial conditions have loosed substantially in the last month.
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