What Just Happened? Six Views on How the Correction Finally Came
- An era of low rates has ended and valuations are too high
- The selling won’t stop from funds who were short volatility
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Like everything in markets, this defies easy narratives. Is it rising yields, hedge funds selling out of arcane positions, inflated valuations bursting or none of the above? After two days of relative peace, investors theorized on what drove U.S. stocks into correction territory.
Chris Rupkey, chief financial economist at MUFG Union Bank: “The era of low interest rates is at an end which means the proverbial punch in the punch bowl is leaving the party. And fast! The stock market is a leading economic indicator and right now it points the way for the economy straight down. There is no way the Federal Reserve is going to raise interest rates at Powell’s first meeting as chair in March. They aren’t that crazy.”