Summary: Although the Federal Reserve's first interest rate hike will "ring the bell" that the U.S. stock bull market is about to end, it does not mean that the six-year bull market will immediately disappear, strategists believe.
CICC News, August 19, Although the Federal Reserve’s first interest rate hike will “ring the bell” that the U.S. stock bull market is about to end, it does not mean that the six-year bull market will immediately disappear. Strategists believe that .
In fact, the bells may not be ringing for two years, UBS strategist Julian Emanuel said in a note to clients.
This is the average length of time bull markets have tended to last since 1970, with the average cumulative gain during this period being approximately 33%.
"Given the slow but long-term rise in the U.S. stock market after the financial crisis, we believe that once the Federal Reserve begins to tighten policy, this will be how long this bull market can last." Emanuel said.
The start of previous interest rate hike cycles usually conveys to stock market investors the Fed's confidence in sustainable economic growth, he pointed out.
In addition, in this report, UBS economist Drew Matus predicts that the Federal Reserve will announce an increase in the federal funds target interest rate for the first time at the two-day meeting that will end on September 17.
Matus warned that market volatility will return as the Federal Reserve initiates more normal monetary policy, especially in an environment where many traders have never experienced a shift in policy rates.
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