Don’t Worry About Another Rate Raise: Stocks And Bonds Can Handle It, Investors Say
Investors are more optimistic about the growing prospect of a June rate hike, indicating both stock and bond markets are ready to take an increase without descending into chaos.
Despite a recent market tantrum after the Fed told officials a rate hike is more likely than they think, many portfolio managers think real upheaval is unlikely, according to data from the Commodity Futures Trading Commission that shows investors are growing more optimistic in key parts of the market, the Wall Street Journal reports. One reason for this is that both oil and the dollar are offering markets more comfort than they did a year ago, giving the market some wiggle room.
The WSJ Dollar Index—a metric that tracks the greenback against a basket of currencies—is down 2.9% this year. This helps soften pressure on the earnings of large US companies, and oil is bouncing back—crude has already surged 82% from this year’s low, making it unlikely that a slow raising of rates will cripple the economy. [WSJ]