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Bond market investors show that they think growth could be a good deal even below these lukewarm levels. Financial markets always affect the decisions of the Fed. As a result, the yield situation likely played a role in the FOMC forecast that no further rate hikes will occur this year, although members indicated that two of them were likely in December 2018.
"Just read the first paragraph of the Fed press release to find that the central bank has noted its badessment of the economic landscape – the choice of words suggests much more than the changes that have been made to the numerical projections," David Rosenberg, chief economist and strategist at Gluskin Sheff, said Thursday in his daily note.
Like other financial market observers, Rosenberg highlighted the various reactions between the bond and equity markets: fixed income yields are falling, indicating weaker growth, while the stock market is on the rise.
"The stock market may not agree with the recession message of the Treasury market, but it would be foolish to ignore this bond move," he wrote. "The real return [compared to inflation] on a 10-year note has collapsed to a 14-month low of 0.56% – it has never bottomed during any part of the Great Recession of 2008/09, for a some perspective. "
Some market indices indicate that yesterday's decision by the Fed to wire a resolutely dovish position could help widen the gap somewhat.
However, the challenges for the economy remain.
"It will be the American consumer – it's the last thing that's holding us back," Boockvar said. "We will need a stock market downturn to knock the consumer in. So if the stock market can hang on, I think the US can continue to see some growth. to go back to the December lows, could be enough to overthrow us. "
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