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According to the experts, rates on shorter-term government bonds are dropping faster than rates on longer-term government bonds. This suggests that the market is anticipating the Fed to reduce rates soon to boost the economy.
Analysts noted that similar events have occurred before leading to economic downturns. Out of the last eight instances when the Fed started easing, half resulted in a smooth transition while the other half led to a recession.
Furthermore, experts emphasized that cyclical stocks underperformed other companies' securities in the initial months following the start of rate reductions, irrespective of the possibility of an impending recession. Hence, investors are advised to choose stocks from the sectors known as "defensive", which have shown better performance in the United States and Europe over the past six months.
Defensive sectors comprise health care, real estate, utilities, telecommunications, and consumer goods production.
source: finance.yahoo.com
Analysts noted that similar events have occurred before leading to economic downturns. Out of the last eight instances when the Fed started easing, half resulted in a smooth transition while the other half led to a recession.
Furthermore, experts emphasized that cyclical stocks underperformed other companies' securities in the initial months following the start of rate reductions, irrespective of the possibility of an impending recession. Hence, investors are advised to choose stocks from the sectors known as "defensive", which have shown better performance in the United States and Europe over the past six months.
Defensive sectors comprise health care, real estate, utilities, telecommunications, and consumer goods production.
source: finance.yahoo.com
