FXStreet reports that Strategists at Capital Economics think that inflation in the U.S. will prove more persistent than both the Fed and investors appear to anticipate. Notwithstanding, they still expect the S&P 500 to make some further gains over the next couple of years.
“We still expect the US economy to grow strongly over the next two years thanks to a combination of loose fiscal and monetary policy, and for this to support corporate earnings and appetite for risk generally. Indeed, we think that, in light of its new framework, the Fed will keep the real stance of monetary policy loose over the next few years, even as inflation proves more entrenched.”
“A lot of good news on the economy already appears to be reflected in the current level of the S&P 500. However, we think there is still scope for earnings in some sectors that have been hit particularly hard by the pandemic to surprise to the upside.”
“While we think that the rise in the 10-year TIPS yields will prevent the valuation of US equities from increasing further we doubt that it will cause it to plummet.”
“While our view that inflation in the US will prove persistent is a reason why we forecast gains in the S&P 500 over the next few years to be small, we are not anticipating a repeat of the sharp sell-offs seen during the periods of high inflation in the 1960s and 1970s.”
© 2000-2021. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at email@example.com.