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Bond markets are jittery. Energy markets are uneasy. The overseas picture doesn’t look too bright. That means investors are dealing with nervousness and uncertainty ahead of Wednesday’s Federal Reserve meeting, when the Fed is expected to boost interest rates.
John Addeo, a senior portfolio manager at John Hancock Asset Management, is in the thick of the swirling market uncertainty.
“Every day is an adventure,” he said.
He does some bond buying, and said the uncertainty has made him more cautious.
“I can’t control investor psychology,” he said. “I can’t control what hedge funds do. But we have to acknowledge that we’ll be impacted by those phenomena.”
And then there are the folks who sunk money into riskier investments because, with low interest rates, safer investments didn’t pay much. Now, with the prospect of higher rates soon, they’re wondering, “what did I do?”
“Maybe investors got a little bit out in front of their skis,” said Aaron Kohli, an interest rate strategist at BMO Capital Markets. “If you’re holding onto the debt of someone who’s drilling for oil, you’re probably more worried now than you w ere a few months ago even.”
And about those oil markets? They’re messing with the Fed’s plans to get inflation back up to normal levels.
“It’s one of the reasons why the inflation numbers are coming in lower than the Fed would like them to,” said David Wyss, an adjunct professor of economics at Brown University.
He said even with the low oil prices and all of the uncertainty, he still expects the Fed to raise rates on Wednesday. Will that calm things down? Nope, Wyss says, because investors will start worrying about what the Fed will do next year.
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