Traders Should Pay Attention to This Benchmark Amid Ongoing Macroeconomic Uncertainty, Says Billionaire Investor Ray Dalio

Billionaire Ray Dalio says that buyers ought to regulate one benchmark indicator amid macroeconomic uncertainty.

In a brand new thread on the social media platform X, hedge fund supervisor Ray Dalio says if the Federal Reserve had been to chop rates of interest an excessive amount of, it might result in additional financial hardships, and that merchants ought to monitor the Fed’s yield curve.

Based on Dalio, a mix of lengthy charges rising, the greenback dipping in worth and an uptick in gold might spell hassle.

“The Fed is in a really troublesome place because it tries to steadiness the advantages of reducing rates of interest with sustaining the worth of cash. Proper now, there’s a substantial amount of uncertainty all through the economic system, together with a deterioration in sentiment.

Mix that with political pressures and the realities of our upcoming debt service funds, and you’ve got this worth of cash battle. So adjustments within the financial coverage – particularly if the minimize is simply too aggressive – might result in a interval of nice concern.

My recommendation: Watch the yield curve. Should you see lengthy charges rising alongside downward motion within the greenback and rises in gold, you’ll know there’s a motion out of bonds. As a result of the worth of cash issues loads.”

The yield curve is a graph that exhibits the rates of interest (yields) of US Treasury securities throughout completely different maturities, from short-term payments to long-term bonds. It displays market expectations about future rates of interest and financial circumstances, and is carefully monitored by the Federal Reserve and market individuals.

Earlier this week, Dalio warned towards buying and selling the preferred meme shares as they’re sure to fizzle out.

“These memes sometimes are resulting from a mixture of extrapolating what occurred earlier than and emotional issues. Additionally, most buyers sometimes don’t take into accounts market pricing.

In different phrases, they have a tendency to establish what has been an incredible funding (e.g., a strongly performing firm) as nice, they usually don’t pay sufficient consideration to its pricing, despite the fact that its pricing (whether or not it’s low-cost or costly) is a very powerful factor.”

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