Fleeting Optimism
Some analysts and fund managers suspect the brightening prospects may prove fleeting. In Wells Fargo’s view, cooling growth and simmering trade friction mean that policy makers will have to cut rates again in January, despite pausing in December.
“This is mostly predicated on a further slowdown in U.S. growth and a potential for the fragile trade peace between the U.S. and China to break down,” said strategist Erik Nelson. “We do not think the worst of the downside risks for the Fed have passed yet.”
There were signs of that truce breaking, as Chinese officials are said to be casting doubt on the possibility of a long-term trade deal with the U.S.
For Julio Callegari, a fixed-income money manager at JPMorgan Asset Management, any Treasury sell-offs are a chance to accumulate.
“If we see a widening, it’s more of an opportunity to buy,” Callegari said. “The next step is still a cut for 2020.”
This story provided by Bloomberg News.