Ed Moya, Senior Market Analyst at OANDA, joins us to take a look at how the surging interest rates and King Dollar are continuing to pressure most market sectors. We start off reviewing the continued sell off in the bonds, spiking both the 2-year and 10-year yields, as the market prepares for at least one more hike, and now the possibility of several more hikes as the Fed postures to keep fighting stickier inflation.
This leads to a discussion of whether all this monetary tightening will eventually lead to a contraction in the economy and recession. Ed notes that some investors are starting to consider taking a more defensive approach incorporating more consumer staples, utilities, and value stocks into their portfolios, but that there hasn’t been a solid move into a purely defensive strategy yet overall. We also point out that with all this market uncertainty, the odd environment where neither bonds or gold are being purchased as safe havens, but instead many are just continuing to pile into the US dollar for the favorable spread versus other currencies.
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