Stock market's risk to reward ratio does not favor bulls, potential Fed tightening

From Investing.com: 2025-01-27 02:35:00

This week, the Bank of Japan raised its policy rate to 50 basis points, signaling further tightening. Japan’s neutral rate may be around 1%, with potential for more hikes in 2025. The yen has weakened against major currencies, impacting carry trades. Rising rates in Japan could also affect global bond yields.

Key economic data this week includes housing data, Fed meeting, and inflation concerns. Corporate surveys show rising inflation expectations. Thursday brings advance GDP report with strong growth projections. Earnings reports from tech giants like Microsoft and Apple are also anticipated.

Implied correlations in the stock market are falling, historically signaling market tops. Treasury General Account rise adds liquidity pressure. Equities outlook appears limited due to tightening liquidity and potential Fed tightening. Forward markets suggest rate hikes in the next 12-18 months.



Read more at Investing.com: Stocks Week Ahead: Market’s Risk to Reward Ratio Does Not Favor the Bulls