Emerging Markets Expert and Founder of Mobius Capital Partners, Markus MoebiusShe allegedly warned against this if inflation persists to survive, interest rates might have to be raised to 9%.
“If inflation is 8%, the playbook says you have to raise rates higher than inflation, which is 9%,” Mobius said Bloomberg TV on Monday. The emerging markets expert also believes that inflation is not going to ease anytime soon, according to the report.
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Mobius’ comments come as investors and traders brace for another 75 basis point rate hike US Federal Reserve during its November monetary policy meeting.
Traders who trade fed fund futures are expecting a peak rate of nearly 5% in March, the report said. Market-derived expectations for the one-year inflation outlook have fallen to 3.2% from 6% in March, the report added.
After a volatile week, major Wall Street indices rose on Monday, led by positive gains. That SPDR S&P 500 ETF Trust SPY closed over 2.5% higher during the Invesco NASDAQ 100 ETF QQQM closed over 3% higher.
On raw materials: The emerging markets expert also warned investors to be cautious on commodities as demand from some key buyers could falter, the report said.
“People who buy commodities are sitting on weaker and weaker currencies,” he said. “You’re likely to see a drop in commodity prices,” Mobius added.
The investor said it has allocated funds to India, Taiwan and Brazil, adding that it has deployed “a little bit in Turkey and also in Vietnam,” according to the report.
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Photo courtesy of Mobius Capital Partners
