Stock markets are rallying because investors believe the Federal Reserve has their backs after last week’s disappointing jobs report, Deutsche Bank’s Joseph LaVorgna said Monday.
Central bankers are essentially stuck now that investors are expecting the Fed to keep its benchmark federal funds rate near zero in the face of weaker labor market data, he said.
“The Fed is very naïve to believe that it could actually raise rates if the market is not discounting it,” Deutsche’s chief U.S. economist told “Squawk on the Street.”
Earlier Monday, Komal Sri-Kumar, president of Sri-Kumar Global Strategies, told CNBC’s “Squawk Box” an interest rate hike at a time when investors are not expecting one could result in a “major shock” because investors would have to reverse their positions.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.