US CPI: markets are overly confident of Fed pivot

<p><strong>By George Prior </strong></p>
<p>Markets appear to be overly confident of a policy pivot by the Federal Reserve, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.</p>
<p>The warning from Nigel Green of deVere Group comes as the inflation in the US is published by the US Bureau of Labor Statistics.</p>
<p>He says: “Inflation remains sticky. The Fed will not want to take the risk of pivoting on policy too soon by cutting rates.</p>
<p>“We believe that the data is still not strong enough for the central bank of the world’s largest economy to commit to reversing its most aggressive tightening campaign in decades – yet the markets seem read to confidently and heavily price-in rate cuts.</p>
<p>“Therefore, we could see a market rally as the year ends, but we think this could be overly optimistic.</p>
<p>“It can be expected that the Fed will leave the US interest rate unchanged at the 5.25%-5.5% range tomorrow (Wednesday) following the last monetary policy meeting of the year.</p>
<p>“But, so far, there’s no pivot in sight.”</p>
<p>The deVere CEO continues: “Inflation is still turning out to be stickier than expected. We expect that markets are pricing-in cuts too quickly. It will be next year before we really know.</p>
<p>“Certainly, some stock surges – such as those which are AI-orientated &#8211; are reasonable. Yet many others are getting ahead of themselves.”</p>
<p>The deVere CEO goes on to add that investors should diversify across asset classes to spread risk and capture opportunities arising from different market conditions; and to consider alternative investments that may provide returns less correlated with traditional asset classes.</p>
<p>He concludes: “Will the Fed really pivot with inflation stubborn? We think not.</p>
<p>“Yet markets seem to be getting carried away that the Fed and its peers of major central banks are ready to pivot.</p>
<p>“Significant opportunities remain, but investors should avoid complacency.”</p>
<p><strong>About:</strong></p>
<p><em>deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.</em></p>