Moody’s Analytics chief economist Mark Zandi in an interview shared his concerns about the current market situation. He concluded by warning that market players should be prepared to face a significant market correction.
The firm’s chief economist expects a more hawkish tone to come from the Federal Reserve and this will indirectly drive a market correction in the 10% to 20% range.
Zandi also expects that the quick recovery to happen is very slim and could likely take a year for the market to recover.
Personally he thinks that the Fed should take a step forward as the economy gets stronger. At the same time he stressed that a correction may be taking place as the market begins to worry.
Recently the Dow Jones Index has suffered its biggest weekly loss since October 2020, falling 3.45%. The S&P 500 index showed its worst performance since late February. The same thing happened to the Nasdaq with a loss of 1.28% from an all -time high.
Zandi has previously repeatedly warned of rising inflation. Zandi stressed that inflation is becoming more critical and investors have not fully perceived the risks. It remains a problem affecting the stock market and bond investors. Zandi sees little possibility that the yield of the benchmark 10 -year Treasury Notes will continue to fall.
Stocks and bonds are not the only risky assets that will be affected, they have more of an impact on commodities and cryptocurrencies. ”Inflation will be higher than pre-pandemic,” Zandi said. "The Fed has been fighting for at least a quarter of a century to raise inflation, and I think they will be able to overcome that."
