Hello,
Ive developed a big interest in the market and economics and the recent development leaves me slightly confused. As I understood markets rallied over the past month off of inflation data coming down and potential interest rate cuts.
Obviously lots of data with ppi, CPi, Jobless etc PP.
Furthermore ratecuts meant (usually) more spending both in private as well as business sector. Now markets anticipate a 50bps cut and sold off hard fearing recession might already be here.
I know that actual cuts in the past led to often mark tops and sold off but my question is:
Why do markets rally in anticipation of rate cuts but now sell off in fear of recession/hard landing.
In: Economics
There’s a very simple maxim of “buy the rumor, sell the news”.
In really simple terms it means people bought anticipating the rate cut and spike in the market and when it happened, sold their position to realize their profit.
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