While global markets cheer the improvement in the US fundamentals, Barclays raises doubts over the expectations of the Federal Reserve’s (Fed) rate hike.
The investment banker cites “the road to full employment is still long” and “inflation is unlikely to remain at the levels priced in for long” as the main catalysts behind the skepticism. It’s worth mentioning that the bank also cites the Fed’s recent guidance to accept inflation above 2.0% as the reason to be cautious.
Both of these together help Barclays to conclude, “Market pricing of one hike by Q1 2022 & almost four by the end of 2023 is too aggressive.”
Even so, bulls seemed to have shrugged off the bank report and are likely favoring the riskier assets, equities and Antipodeans, by the press time of early Tuesday’s Asian session.
Read: Wall Street Close: Stocks surge following string of strong tier one data releases
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