- Increasing fear among US investors amid Jerome Powell's forecasted rate increase and global market unsettledness.
- Potential implications of rising fear and investor behavior on the broader economy.
- The possible role of financial indicators like the S&P Global’s Manufacturing PMI in shaping the investor sentiment.
US investors are growing increasingly apprehensive, and this phenomenon must not be ignored. As suggested by the CNN Money Fear and Greed Index, fear is surging among the investment community, a trend that can undoubtedly stir the market and, ultimately, the economy.
Among the factors propelling this fear, a key trigger appears to be the looming rate increase unveiled by Federal Reserve Chair Jerome Powell. The majority of committee members advocate for another rate increase to be initiated in one of the remaining Federal Open Market Committee meetings this year. This forecast has thrown investors into a dilemma and seems to have contributed significantly to the swelling fear.
Under normal circumstances, a rate increase signifies an improving economy which, in turn, breeds investor confidence. However, the current economic landscape is far from normal. Many industries still bear the brunt of the global pandemic and have yet to fully recover. Against such a backdrop, another rate increase could increase the cost of borrowing, compress liquidity, and hamper growth - a scenario that's hard for investors to swallow.
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