The U.S. stocks have pulled out to a strong start in 2023, with January’s rally supported by recent signs that inflation may have peaked. Growing signs of slowing consumer spending should help drag down inflation further. Investors are betting that the Fed will be able to slow its rate hikes and even possibly lower interest rates by the end of 2023.
The market is currently pricing a 25-basis-point rate hike at tomorrow’s Federal Reserve meeting. Moreover, the U.S. Gross Domestic Product (GDP) rose at a 2.9% annualized pace in the fourth quarter, slightly better than the Dow Jones estimate of 2.8%.
