Excerpt from Barron’s quoting DataTrek’s Nick Colas:
…. “Plus, the fed funds futures market is reflecting a peak rate of about 4% and the possibility for rate cuts next year. That could provide relief for the economy—and the stock market.
“Whether the FOMC raises interest rates by 75 or 100 basis points a week from Wednesday is much less important to stock prices than where markets believe the Fed will stop the current rate tightening cycle,” writes Nicholas Colas, founder of DataTrek.
Consistent with the peak Fed-tightening and peak inflation narrative, long-dated bond yields are also below their highs. The 10-year Treasury yield is just below 3%, after having hit a multiyear high of about 3.5% in mid June. That is key for stock valuations, as the S&P 500’s aggregate forward price/earnings multiple has stabilized at about 16 times, down from just over 20 times to start the year”…
Read the full article here on Barron’s!