Analysts at Macquarie have weighed in on the prospects of the Federal Open Market Committee (FOMC) bringing back a rate cut in the near future, in light of recent economic data.
According to the bank, three consecutive upside surprises in the consumer-price index (CPI) have contributed to a more hawkish stance from the Fed. However, they believe that a significant miss on this week’s inflation data from the US could turn the tide and put a December rate cut back in play.
Macquarie points to two key drivers behind the recent improvement in global stock markets:
1. A lack of respite from the strength of the US dollar has not dampened the positive sentiment.
2. A divergence between the performance of value and growth stocks, with value stocks outperforming as investors seek refuge from rising interest rates.
