Markets Tear Up Popular Trades That Reached ‘Stupid Levels’
- Assumptions on Fed rate cuts, AI, earnings have been upended
- Result include yen rally, plunge in large-cap tech stocks
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The assumptions that have driven this year’s global financial markets are being rapidly rethought.
In bond and currency markets, investors are racing to redeploy money amid mounting doubt over the outlook for the US economy, which has led to speculation that the Federal Reserve may end up cutting interest rates faster or deeper than planned. Helping to drive the shift: A weakening American consumer, which is showing up in a rash of disappointing corporate earnings.