Investors are “too aggressive” in their expectation that the Federal Reserve will cut rates sometime this year, according to BlackRock Inc.
Scott Thiel, BlackRock’s chief fixed income strategist, said it’s a case of money managers overreacting to geopolitical noise, such as U.S.-China trade tension. The implied probability of the Fed lowering borrowing costs in 2019 is more than 70%, data compiled by Bloomberg show.
“It looks a bit extreme now in terms of the amount of easing priced in, given the fundamental situation and what we got yesterday on what the Fed thinks about the economy,” Thiel said on Bloomberg TV.
Thiel said he likes to own U.S. Treasurys because of the balance they offer investors in a portfolio. India’s election should boost market sentiment, buoyed by optimism over Prime Minister Narendra Modi’s efforts to fix the nation’s banking system. Still, growth must be delivered in order for the stock market to move materially higher, he said.
This article was provided by Bloomberg News.