Expert warns that the US plan could be “worse than disease” in terms of the global economy.


Expert warns that the US plan could be ‘worse than disease’ in terms of global economic collapse.

Fears of a global economic crash have grown, with an expert warning that rising inflation is jeopardizing any post-Covid recovery plan.

Inflation rates are rising around the world, prompting many countries, including the United States, to devise plans to save their economies by selling bonds.

Tom Stevenson, an investment director at Fidelity International, commented on the Federal Reserve’s plan, claiming that investors may be in for a greater shock as a result of the reserve’s plan to restore the economy.

The Federal Reserve intends to reduce its balance sheet by allowing bonds to mature or selling them.

It will raise yields by selling off or reducing the bonds it issues to investors.

Bond yields have already risen from 1.5 to 1.8 percent as a result of the reduction in bonds.

Stocks in the Nasdaq and Dow Jones fell this month as a result of these bond yields.

“During the pandemic, it has doubled the size of its balance sheet again,” Mr Stevenson wrote for The Daily Telegraph, “and to make a serious dent in its holdings today, it will have to drop a load more bonds on the market than it was able to three years ago.”

“Investors are betting that it will lose its cool once more this time, but they could be wrong.”

“The difference today is inflation, which hasn’t been this high since the Fed was fighting to reverse the 1970s’ crippling price spirals.

“The market’s fear has always been that allowing inflation to spiral out of control could make the cure worse than the disease.”

“We’ll find out this year.”

With sales in shares worth £1.1 trillion, technology stocks accounted for the majority of the run-off.

Mr Stevenson adds that technology stocks are important to the US market, with five of them worth nearly a quarter of the other 500 on the Sandamp;P market exchange.

“As the recent relative performance of growth and value-focused shares suggests, it could rekindle the rotation away from the technology shares that have kept the market on an upward trajectory throughout the Covid period and toward the more cyclical companies that will benefit most from an inflationary boom as we come out the other side,” he said.

“Brinkwire News Summary.”


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