Chairman Powell did not throw any cold water whatsoever on the recent narrative that says the Fed will cut rates in a meaningful way next year yesterday. Assuming this doesn’t mean the Fed is now worried about a recession; it has given investors the green light to keep buying risk assets with both hands.
We do need to point out that both the bond and stock markets are becoming quite overbought on a short-term basis. Therefore, they could see some sort of near-term pullback before long. However, like we said, Chairman Powell gave investors a big green light yesterday. (God help him if it turns out he is steering investors in the wrong direction.)
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