In recent times, data has shown that the US is experiencing an optimal balance between growth, earnings, and inflation. This positive trend is not limited to the US as growth in other parts of the world is also on the rise. These favorable conditions are great for risk assets and implementing risk hedges, as they are currently most cost-effective. With the latest data from the US indicating that this trend will continue in the near future, investors can expect risk assets to perform well.
Looking ahead, one of the major challenges that investors should be aware of is May 31st when the Fed releases its preferred inflation measure, the PCE. However, based on recent consumer and producer price inflation figures, it is expected that this number will be moderate. Additionally, with no significant concerns regarding a recession at present, any negative employment data is more likely to lower bond yields rather than raise worries about the economy or corporate profits. This creates a promising outlook for investors in the near future.
In summary, “Peak Goldilocks has legs” describes the current situation where ideal conditions for risk assets are expected to persist for some time. Investors have an opportunity to take advantage of this period of stability and growth by benefiting from favorable market conditions.
