James Caron, Morgan Stanley’s Co-Founder and Global head strategist spoke on Reuters Investment Outlook Summit and has reiterated some interesting points.
For one Fed. Rate would hold the interest rate before 2009. According to him the CPI might peak at 5% to 5.5% before reducing to 4.6% by the year end. Similarly the U.S Treasury yields could hit 4.75% with the current level of 4.10%.
It is a know fact that, Bernanke has reiterated his stand on inflation and is strongly opposed to any sort of policies that would lead to inflation. It is also widely believed that the Fed. might follow 75 basis point of tightening. Caron feels that we can look forward for a below the trend growth rate for the U.S though not a long spell of recession.