“‘If they cut too soon, I think they risk losing credibility around their commitment to a 2% inflation target.”
Billionaire investor Ken Griffin, founder of hedge-fund and financial services giant Citadel, told Bloomberg Tuesday that the Federal Reserve “needs to have the message that they will put the inflation genie back in the bottle”.
Griffin sees inflation as stubborn. He warned last week that higher baseline inflation may go on for decades, caused by structural changes that are pushing the world toward de-globalization.
Griffin told Bloomberg on Tuesday that he expects a recession in the second quarter, but that its severity would depend on a number of factors. Griffin doesn’t expect the Fed to raise interest rates further, nor does he expect Congress to cut spending ahead of the 2024 elections.
Treasury yields fell sharply and stocks soared on Tuesday, after a smaller-subdued headline and core consumer price index readings for October reinforced investor expectations the Fed has come to the end of its rate-hike cycle. Investors have started to pencil in rate cuts for 2024.
October CPI report: Dow surges, Treasury yields drop after subdued inflation data
The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
dropped more than 18 basis points to below 4.44%. Yields move opposite to price.
The Dow Jones Industrial Average
DJIA
was up more than 580 points, or 1.7%, while the S&P 500
SPX
surged to a gain of 2.2% and the Nasdaq Composite
COMP
jumped 2.6%.
See: Economists in hawkish camp don’t surrender in wake of October consumer-inflation print
This post was originally published on Market Watch
