The dollar bull market will eventually break something


With the Fed having raised interest rates for the second time in ten years, in an environment in which US growth looks pretty good, we should expect more hikes to come. The question is whether the economy can withstand the hikes and what they would mean for markets. I have five asset classes to watch: Treasuries, the US Dollar, Emerging Markets, the Japanese Yen, and Gold.

Let’s start in the US. As I wrote in the last post, I have been optimistic about the US economy since August. Four months later, the Fed has rewarded the US economy with a rate hike. If the economy continues to show the same or a greater level of resilience, the Fed will keep dishing out the rewards. They predict three rewards this year. But in fact, as Tim Duy wrote a couple of days ago, the Fed could be more rewarding than anticipated:

The dollar bull market will eventually break something


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