For the last several months the only driver of the market as been the expectations on the future fed funds rate. As you can see as the Fed Funds have free fallen ETFs like ARKK ( which are a good representation of speculative growth stocks ) have fallen in tandem. In contract defensive sectors like XLP continue to make new highs.
The Fed was projecting 3 rate hikes in 2022 near the end of 2021. As of their March meeting those expectation have increased to a total of 7 hikes by the end of 2022 (6 more). While the Fed Funds futures market is expecting 11.
Historically the market and the FED are really bad gauges of the future fed funds rate. At the beginning of rate hike cycles they almost always over estimate the amount of rate hikes.
When sentiment shifts we should expect to see defensive rotation back into growth/tech.
The Fed was projecting 3 rate hikes in 2022 near the end of 2021. As of their March meeting those expectation have increased to a total of 7 hikes by the end of 2022 (6 more). While the Fed Funds futures market is expecting 11.
Historically the market and the FED are really bad gauges of the future fed funds rate. At the beginning of rate hike cycles they almost always over estimate the amount of rate hikes.
When sentiment shifts we should expect to see defensive rotation back into growth/tech.