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Siegel: The yield curve is facing upside down, and the Fed is best off reducing interest rates by 2 yard at the end of the month |



US stocks have recorded record results this week, and Jeremy Siegel, a professor at Wharton School of the University of Pennsylvania, said on Friday that the gathering will not stop in the near future.

Siegel, known for his US shares, said in the financial program "Fast half-year cash report," as the Fed says interest rates will soon be reduced, a reasonable market value will increase S & P 500 by 5% to 6% this year. "

"But before the sale, it can grow by 10% to 12%." He pointed out that the Fed often exceeds the upward or downward adjustment of the exchange rate.

FED's interest rate policy has widely criticized Wall Street and Trump's dissatisfaction, and this week, when President Feda Jerome Powell gave a statement to Congress, he finally pointed to a reduction in rates.

Last year the interest rate rise was 0.25% for each of the four times, and the targeted range of overnight interest rates on federal funds now amounts to 2.25% to 2.5%. Last year, the Fed raised the borrowing expense for the last time, opened a stock market decline in December.

Siegel expressed hope that the Fed will cut interest rates by 0.5% by the end of the month, but also admits that such brave action is impossible.

On Friday, the CME FedWatch tool shows that the likelihood of a 0.5% reduction at the end of this month is only 25%, and the likelihood of a 0.25% reduction is as high as 75%.

The reason why Siegel still hopes to cut interest rates is that he is concerned that the Federal Reserve rate is higher than a ten-year bond yield, while the latter is about 2.1% on Friday, while the short-term bond yield curve is actually 3 months. The yield of public debt is greater than the 10-year period, so-called. "Reverse Turnover Curve", and historically always pointed to a recession in the near future.

"The biggest factor is that we really get the curve of yielding the overhead and overtaking history, which is the only signal of the most reliable recession." I'm worried about it. "



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