The Straits Times Index (STI) has moved sideways despite ominous signs of an inverted US Treasury yield curve. Morningstar reports that the 10-year Treasury yield reached its lowest level since late October, causing concern among investors.
Markets are now pricing in a 66.3% probability that the Federal Reserve will cut interest rates by at least 25 basis points after its next meeting on December 18. Analysts expect this rate cut to signal further easing of monetary policy globally.
However, experts caution that US President-elect Donald Trump’s policy priorities may have an inflationary impact and affect Federal Reserve rate cuts. While some policies could lead to a recession or stagflation in the US within the next four years, others may support the equity market.
The Straits Times Index has been trading sideways since November 25-29, with a week-on-week decline of six points but still above the intra-week low of 3,708. Analysts note that negative divergences between short-term indicators and the index may persist, but quarterly momentum remains intact.
Investors will be monitoring data and anecdotes relating to Black Friday spending for confirmation that consumers remain relatively stoic. With global policy uncertainty on the horizon, markets are expected to consolidate gains rather than make significant movements.
Source: https://sg.news.yahoo.com/sti-continues-move-sideways-ominous-052152665.html