Fed Rate Outlook Remains Unclear as Investors Watch Bond Yields and Inflation for Direction

Market narrative is unclear on Fed's rate outlook according to strategist Seema Shah, as investors watch bonds and inflation data for signals.

Shah says spike in yields has tightened conditions, possibly offsetting a rate hike the Fed signaled. But yields have since fallen as expectations pulled back.

Momentum suggests yields could rise further, but are near peak. Equities watching yields closely for stabilization signals.

Shah recommends diversified portfolios given unclear narrative and typical volatility around policy turning points.

Best to wait for clearer 2024 outlook when Fed likely on pause before next rate cut. Neutral positioning recommended for now as equities rangebound.