‘Forget a pivot’, markets won’t see Fed rate cut rise in 2023, analyst says

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Bitcoin (BTC) and other bulls will not benefit from a major change in US inflation policy in 2023, analyst says.

In a December 20 Twitter thread, Jim Bianco, director of institutional research firm Bianco Research, said the Federal Reserve would not look to rate hikes next year.

Bianco: Japan YCC move “accounts for all markets”

In light of the Bank of Japan’s (BoJ) surprise change in yield curve control (YCC), analysts have become all the more bearish on the outlook for risk assets this week.

As Cointelegraph reported, the move caused immediate pain for the US dollar, and with Wall Street open in sight, stock futures were trending lower at the time of writing.

For Bianco, the fact that the BoJ now seeks to follow the Fed in its tightening policy to fight inflation meant that the latter was unlikely to ease its own policy.

Again, if JAPAN! is NOW changing policy NOW because of inflation, remind me why the Fed would pivot anytime in 2023? part of a read message.

The answer is that they won’t. You can forget a pivot.

The real tangible consequences of Japan’s decision may not be felt until later, Bianco continued. With rising bond yields, Japan should attract capital at home and away from the United States

The dollar crashes against the yen (or the yen soars against the dollar). Japan gets a return again. This should bring funds back to Japan, he wrote.

A return to lower interest rates is a key eventuality priced in by markets beyond crypto, and it’s something that simply doesn’t pay off anymore, Binanco said. Although BTC/USD has already fallen nearly 80% in just over a year alongside the Fed’s quantitative tightening (QT), so the pain may still be far from over.

Powell is hawkish, he concluded, referring to Fed Chairman Jerome Powell’s speech last week in which he sought to distract markets from anticipation of any policy easing.

ECB director Legarde (Madame Laggard) now speaks hawkishly. Kuroda and the BoJ are (now) taking action that shows their concern about inflation. Markets may need to reconsider their views on central bank pivoting. Source: Jim Bianco/TwitterFidelity exec warns of a ‘shaky’ year

Other outlooks sought to offer a more optimistic view of the year ahead, while avoiding implicitly bullish language.

Related: “Lower wave” for all markets? 5 things to know about Bitcoin this week

Jurrien Timmer, director of global macroeconomics at asset management giant Fidelity Investments, forecast 2023 as a “sideways” trading environment for equities.

“My feeling is that 2023 will be a choppy market, with one or more retests of the 2022 low, but not necessarily much worse than that,” he tweeted on Dec. 19.

“Anyway, I don’t think we’re anywhere close to a new cyclical bull market yet.” Annotated market cycle comparison chart. Source: Jurrien Timmer/Twitter

In later comments, Timmer added that while he believes a secular bull market has been in place since 2009, the “question is whether the secular bull market is still alive.”

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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