Jeremy Siegel "US Economy Continues Strength... Interest Rates Hold Steady in November"
Jeremy Siegel, a professor at the Wharton School of the University of Pennsylvania, diagnosed on the 2nd (local time) that despite the rising trend in government bond yields, the U.S. economy is generally maintaining its strength. He also predicted that the Federal Reserve (Fed) will keep interest rates unchanged in November.
Professor Siegel appeared on CNBC's Squawk on the Street that day and said, "I think this economy is cooking," adding, "Some things that have happened were negative, but overall it is a strong economy."
Recently, government bond yields in the New York bond market have been rising. The benchmark 10-year U.S. Treasury yield surpassed 4.7% during the session, marking the highest level since October 2007. Professor Siegel said that this rise in government bond yields is putting pressure on the stock market, and investors are viewing it differently in an inflationary environment.
He explained, "What happened last year, that is, the perception that bonds are no longer a hedge against stock market declines as they were over the past 20 years, has weakened the desire for bonds in your (investment) portfolio in a situation where inflation is possible."
Regarding the recently released weekly unemployment claims, Professor Siegel said, "It is one of the indicators showing weakness in the actual (economy), but it has not yet shown that," suggesting that the U.S. economy remains solid. He also predicted that core inflation indicators will continue to be "stubborn." However, he mentioned that the accumulated tightening is having some effects and expected that the Fed will not raise interest rates in November.
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Meanwhile, Fed Governor Michelle Bowman emphasized the need for additional rate hikes in a speech that day. She expressed concern that the recent rise in oil prices could disrupt the trend of easing inflation, pointing out, "There is a risk of reversing some of the progress made on inflation." She added, "Additional tightening policies are necessary to continue lowering inflation."
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