Analysts at Credit Suisse are saying the US Federal Reserve might put its interest rate increment campaign on hold sooner than expected. They based their postulation on the falling inflation rates. The company’s US Chief Equity Strategist, there is going to be a strong market disintegration.
Welcoming Fewer Inflation Rates
The Chief Strategist, Jonathan Golub, spoke with CBNC on Monday where he mentioned that lesser rates are expected in the general view of the market. He said that everyone sees when they are out at gas points that the price is down. The same goes for the price of food items, he continued.
The reality of lesser inflation is getting revealed in reports already, and that amounts to a huge positive possibility. While he previewed the PPI and CPI reports for the month of August in a new note, Golub argued that the collapse of inflation rates will take place in the course of the coming 12 to 18 months.
Golub wrote in his note that examined futures are suggesting that the price of energy and food are expected to drop by -11.8% and -5.7% by the end of 2023. Meanwhile, inflation of goods has dropped to 7% from 12.3% as read in February. He continued in the note by saying the price of rent and services have gone up within the last year by 5.8% and 5.5% respectively but they are less than the increment the headline CPI made at 8.5%.
Best Time to Invest?
The Credit Suisse executive is of the opinion that if there are indications of the inflation’s breakdown, then it should compel the Federal Reserve to cease the interest rate increments. He, however, puts the time between the coming 4 to 6 months.
Golub also said there is a belief in the market that when it gets to the first quarter of 2023, the Federal Reserve will outrightly stop the increment trend or at least, give an indication that it is about to stop. That is if the Feds continue on this path till that time. It is said that the stock market is going to move heavily in a few moments.
This might be the perfect time for investors to seek out opportunities. Golub personally prefers industrials, consumer items, and oil derivative products. He said the market’s valuations are currently oscillating between cheap and fair, indicating that there is more gain to be made.
Golub said his S&P 500 end-of-the-year speculation is 4,300, which means there is about a 5% profit from the closing mark on Monday. the S&P 500 index has gained 8% in the course of the last two months. But the index remains some 15% off its all-time high.