Fed hikes won’t make cash or bonds attractive: Ray Dalio
Jan 24, 2022
The U.S. Federal Reserve’s decision to increase interest rates is unlikely to make cash or bonds attractive to own, says Ray Dalio, co-chairman and co-chief investment officer of Bridgewater Associates, the world’s biggest hedge fund with over $150 billion in assets, in an exclusive interview with Fortune India.
With consumer
price inflation close to a four-decade high of 7%, the Fed in its December
meeting announced that it would wind down its quantitative easing programme
(bond purchases) by March. The market is already anticipating that the central
bank could also announce a rate hike around the same time — the first
hike since the end of 2018 — followed by two more 25 basis
points hikes later during the year.
Dalio believes that it is unlikely that the interest rate increases will bring cash or bond rates up to attractive levels relative to alternative investment returns. “The projected rate increases will not be adequate enough to make cash and bonds an attractive alternative, and neither will it be enough to curtail inflation. So, in relation to inflation there will still be negative returns in those assets even if there is a rate hike,” believes Dalio. ㄝ害 ~ 他認為連升息也救不了通膨
Following the
Fed hawkish signal, the benchmark US 10-year T-bill hit a high of 1.9% — the highest
level since January 2020 — before retreating to 1.83%.
The strengthening of yields has spooked equity markets across the globe,
including India. However, Dalio does not expect a steep fall in the markets for
now. “Any significant downturn in the markets and economy
is unlikely in 2022; though 2023 and 2024 should get progressively riskier,” tells Dalio.
很明顯 ~ 他認為這次狀況會跟1970s初期一樣
Sharing his analysis of economic cycles, Dalio explains that, typically, a recessionary cycle leads to a lot of stimulation by central banks, resulting in an economic expansion that is followed by inflation. The price spike is then followed by tighter monetary policy that leads to a recession, and then the cycle repeats again. On average, the cycle lasts about seven years, but the length of them is determined by how much debt and money creation there is and how much slack capacity there is before production constraints are hit.
市場需求和企業生產要緊密配合, 假如商品賣不出去, 存貨堆積, 企業呆帳飆升(慘) 企業獲利一衰退, 接下來裁員, 產能利用率降( 工廠關機台) slack capacity 就是生產供給面受擠壓, 甚至衰退production constraints
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