Fed rate cuts not enough to shift from cash to equities
STOXX 600 down 0.2%
Healthcare leads, tech lags
GSK jumps on Zantac settlement
Wall St futures lower
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
FED RATE CUTS NOT ENOUGH TO SHIFT FROM CASH TO EQUITIES
A surge in inflows to money market funds (MMFs) due to higher rates could slow as central banks embark on looser policy, but analysts at Barclays don't think it's time for cash to shift into riskier assets just yet.
"Since last year, there have been widespread and persistent expectations that investors would shift out of cash and into equities to drive share prices higher," Barclays says, noting that there is $6 trillion in MMFs that could be look to earn higher returns elsewhere as the Fed cuts rates.
The Fed kicked off its easing cycle with a 50 bp rate cut, but the central bank is seen cutting rates in a gradual manner through next year as the labour market remains relatively robust.
And Barclays doubts the Fed's projected policy path will create enough of a premium to encourage investors away from money markets and into credit or stocks yet.
"The rotation into credit is unlikely for another six months or so... because money funds still yield more than front-end IG. However, this should change as the Treasury yield curve steepens," they write.
As for stocks, "The equity risk premium (defined as the spread of 12m forward earnings yield over 10y Treasury yield) is 75bp, up from the multi-year lows in June, but not enough for money fund balances to move this far up the risk curve," Barclays says.
So how much equity risk premium is enough?
Barclays finds the dotcom bubble era to be a good proxy as the risk premium that equity investors could earn over the 10-year treasury yield jumped to 200 bps.
"Subsequently, and despite Fed hikes that begun in 2004, cash holdings fell sharply in 2002-2005 as equity markets stabilized and then entered the 2000s bull market," Barclays says, "leading us to believe that a substantial rotation from cash to equities took place during this period."
(Samuel Indyk)
*****
THURSDAY'S OTHER LIVE MARKETS POSTS:
OIL PRICES COULD REACH $90/BBL IF MIDDLE EAST CONFLICT HITS SUPPLIES CLICK HERE
EUROPEAN SHARES MOSTLY LOWER; MARKETS AWAIT US CPI CLICK HERE
EUROPE FUTURES EDGE LOWER AS US CPI LOOMS CLICK HERE
CHINA STOCKS PARTY RESUMES WITH AN EYE ON SATURDAY CLICK HERE
STXE 600 PR INDEX https://reut.rs/3BEV5jw
European shares mostly softer, Wall St futures lower https://reut.rs/483P9fW
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
