Bloomberg: S&P 500 Can Resume Gains After a September Correction
The Federal Reserve’s policy decision was implicitly supportive for financial market conditions. This framework suggests more S&P 500 gains later in 2020 and into 2021, while 10-year Treasury yields will gradually decline again later. That’s the reasoning of one Markets Live reader, written in response to today’s Question of the Day.
According to Ioannis Kouravelos, senior market analyst at Alpha Bank in Athens, average inflation targeting and the intention to assess shortfalls of employment from maximum levels clearly mean that the Fed will:
• continue asset buying at least until the end of 2022
• will keep the funds rate at 0%-0.25% at least until 2025
The S&P 500’s mid-term bull market is supported by the flood of monetary stimulus. The historic pattern suggests the S&P 500 could reasonably see a 5% correction from historic highs in September, then resume gains toward the end of 2020, Kouravelos said.
Short-term trading is probably driving the US 10-year yield mildly upward. However, the more probable medium-term outcome is that asset managers will buy government bonds again around yield levels of 0.77%-0.92%, sending them lower again, Kouravelos posited.
The Federal Reserve’s policy decision was implicitly supportive for financial market conditions. This framework suggests more S&P 500 gains later in 2020 and into 2021, while 10-year Treasury yields will gradually decline again later. That’s the reasoning of one Markets Live reader, written in response to today’s Question of the Day.
According to Ioannis Kouravelos, senior market analyst at Alpha Bank in Athens, average inflation targeting and the intention to assess shortfalls of employment from maximum levels clearly mean that the Fed will:
• continue asset buying at least until the end of 2022
• will keep the funds rate at 0%-0.25% at least until 2025
The S&P 500’s mid-term bull market is supported by the flood of monetary stimulus. The historic pattern suggests the S&P 500 could reasonably see a 5% correction from historic highs in September, then resume gains toward the end of 2020, Kouravelos said.
Short-term trading is probably driving the US 10-year yield mildly upward. However, the more probable medium-term outcome is that asset managers will buy government bonds again around yield levels of 0.77%-0.92%, sending them lower again, Kouravelos posited.