Rise in Stock and Bond Markets in Light of Expectations of a Halt in Interest Rate Hikes by the Federal Reserve | Wassim Jomaa in an Interview with Al Arabiya Business

Lately, the market has been responding to bad news as if it were good news in disguise, which led to a decline in bond yields. This was a result of pricing in the expectations of the markets that the Fed might have reached the peak in terms of interest rate hikes, and the proof is that it kept rates unchanged since the July meeting.

We will watch three key points till the next Fed meeting in December 2023:

- Personal Consumption Expenditures index (PCE)

- Unemployment data

- Inflation indices

If unemployment indices continue rising while wage growth rates decline, stocks and bonds could continue increasing through the end of the year. We are apprehensive of the realization of the bad news in the beginning of the year with bond yields rising, and we are in anticipation of corporate earnings reports for Q4 and the outlook for Q1, which could result in greater caution in markets.

We still consider Artificial Intelligence (AI) and biotechnology good investment themes for the coming years, and we are currently watching stocks that recently started to rise, including small and mid-sized companies.

To some degree, the market remains apprehensive of an economic slowdown and continued monetary tightening.

Watch the full interview above.