The longtime market bull says, 'We may go up 10% or 12% before we sell off,' Siegel added, noting the Fed tends to overshoot when adjusting rates.
After four 0.25% hikes last year, the target range for the fed funds overnight bank lending rate stands at 2.25% to 2.5%. The final Fed increase in borrowing costs in 2018 came in December when the stock market was melting down.
Siegel said he hopes the Fed cuts rates by a half percentage point at its upcoming July 30-31 meeting, though he acknowledges that such a bold move would be unlikely.tracker was putting only about a 25% probability on a 0.5% reduction in the fed funds and much larger 75% odds on a 0.25% cut. The reason Siegel would like to see a deeper cut is because he's concerned about the fed funds rate being higher than the3-month TreasuryThat so-called inverted yield curve, when shorter-term bonds deliver higher rates than longer-term ones, historically has signaled a recession on the horizon.
"The biggest factor here is we really did see an inversion in that yield curve," Siegel said. "I've gone through history, it is one of the most single reliable indicators of a recession. And I worry about that."
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