What’s coming Next
A serious economic downturn could justify an earlier rate cut, but that is looking less likely. The economy was expected to expand by 2.0% this year and 0.9% in 2024, according to the poll. Schiff predicts that many investors will face a significant shock in the upcoming year as inflation is expected to rise even higher in 2024.
Median one-year-ahead inflation expectations rose slightly last month to 3.6% from 3.5% in July, the New York Fed said Monday. Expectations for what inflation will be at the three-year horizon declined to 2.8% from 2.9%. And the outlook for inflation in five years ticked higher to 3.0% from 2.9%.
Peter Schiff is a well-known American financial analyst who has gained prominence for his views on economic and financial matters. As Peter Schiff believes that the FED is downplaying its commitment to low inflation and might prioritize preventing crises over price stability. The inflation-fighting hikes to the central bank’s influential fed funds rate have pushed up interest rates for mortgages, credit cards, and all kinds of other loans in an effort to dampen spending and allow supply and demand to rebalance.
Regarding perceptions of a victory against inflation, Schiff highlights PPI’s upward trajectory as a precursor to potential CPI inflation. Punch one, yesterday’s CPI report revealed that inflationary pressures last month rose to their highest monthly level this year. Punch two, today’s release of the PPI (Producer Price Index) also rose 0.7% last month. Here are the selective segments from a recent video where Peter Schiff shares his viewpoints.
Many economists also expect Fed policymakers to signal fewer rate cuts next year. Financial markets are currently pricing for rates to fall to 4.4% by the end of 2024 and 3.8% by the end of 2025. However, Schiff argues that this perspective is misguided, as he observes rising inflation.
In addition, Schiff highlights the surge in oil prices with an eight percent increase in September. He also points out the parallel rise in bond yields with oil prices. West Texas Intermediate closed at 91.20 dollars a barrel, marking its first close above 90 dollars this year and the highest since late 2022, registering a gain of over 4% for the week.
The 10-year T-bond yield increased by 3 points to 4.32% on Friday, up 6 points for the week. The Australian dollar ended the week at 64.34 US cents, slightly down for the day but up by 0.90% for the week.
Credit to : Finance Flow
