John Maynard Keynes’ famous line that markets can remain irrational longer than (investors) can remain solvent is an apt descriptor for the direction of US interest rates and asset-price distortion from radical monetary policy experiments worldwide.
Markets know US interest rates have to rise. The debate is over the timing and magnitude of rate rises. The “doves” favour continued low US inflation, low economic growth and slow rate rises from here. The “hawks” say higher US interest rates are needed to combat inflation risks.
The debate outcome will have massive ramifications for the global economy and asset classes. If the doves are right, US rates will remain low and increase only gradually for a few more years, in turn supporting asset valuations, companies with high debt and investor confidence.