Peter Boockvar: The Fed must slow the pace of interest rate hikes
Peter Boockvar, CIO of Bleakley Advisory Group told CNBC “Squawk Box” on Friday that the Fed should slow its interest hikes. Peter called the Fed’s moves aggressive, followed by various central banks after years of interest rate cuts.
The dollar’s short-term spike likely due to Fed moves
According to Peter, sharp short-term moves can cause the dollar to peak. Over the next two quarters, bond yields will continue to rise even after the sharp increases seen following aggressive action by the Fed and other central banks around the world.
Are you looking for fast news, tips and market analysis? Sign up for the Invezz newsletter today.
He explained that the market is seeing a general unwinding of more than a decade of artificially suppressed interest rates. Although recent increases in bond yields have been sharp, Peter argues that they will mark a near-term top. However, he said the numbers are still below the rate of inflation, indicating upside potential.
Boockvar’s remarks came after a statement earlier this week that the Federal Reserve was raising its benchmark rate by 75 basis points (as reported by Invezz on Sept. 21), which will be a third straight hike. At the same time, forecasts from the US central bank indicate that further significant increases are expected before the end of the year.
According to Peter, if there are liquidity problems in the Treasury market which should be the most liquid in the world, it means the end of leveraged liquidity in the loan market, where it takes weeks to clear an obligation. Furthermore, he explained that requiring banks to hold more capital creates frictions on trading and lending capacity.
Boockvar: Rising interest rates could cause upheaval
Given the sudden changes in the market, Peter says the Fed needs to slow down interest rate hikes because rising interest rates are likely to cause disruption.
“I can agree with them if they want to get to 4% or 4.5%, but it’s the speed at which they get there that creates the most danger right now and the most disruption.”
Invest in crypto, stocks, ETFs and more in minutes with our favorite broker, eToro.
68% of retail CFD accounts lose money