Market is predicting no rate cuts in 2025, says Wharton's Jeremy Siegel

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강한 고용지표로 금리 인하 기대가 후퇴했고, 시장은 2025년 금리 인하가 없을 수 있다고 반영 중. 연준 기금금리 4.3% 기준 역사적 장단기 스프레드(1~1.5%p)를 적용하면 10년물 금리는 5~5.75% 수준까지 갈 수 있음. VIX 20 부근은 큰 폭락보다는 조정 수준으로 봄. 금리 상승 시 소형주와 고PER 기술주는 부담.

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01. from more now let's bring in Wharton School professor and Wisdom Tree senior economist Jeremy Siegel. Professor, welcome back. It's nice to see you in this new year. Good afternoon, Scott. What do you make of the market's reaction today to that better-than-expected jobs report and the moving rates?

02. Well, the price of stocks is always a battle between the numerator and the denominator. The numerator is earnings, and a strong report is good for earnings. But a strong report also means higher interest rates, and that's the denominator. Today the denominator beat the numerator. I think the market is really saying there may be no rate cuts in 2025, and that the 10-year could very easily break well above 5%.

03. One has to realize, I've done the historical research over the last half century. The long rate has been, on average, between one and one and a half percentage points above the Fed funds rate. We have a Fed funds rate now at 4.3%. So do the math: you're talking about 5 to 5.5, potentially 5.75 on the 10-year. That's a normal term structure. That's not unusual. We got so used to this inverted curve, with the short rate above the long rate, that we thought the long rate would stay low. But that is not normal through history.

04. So now I think what investors have to say is, oh my goodness, all right. If the 10-year goes into the 5s, earnings are going to be good, but I have to take that into account. Are you thinking the Fed might not cut anymore? I know you said the market might be thinking that. Does that match with your own view? And do you really think the 10-year could get substantially over 5%?

05. I think it could. No one really knows; anything could happen. When we talk about three, six, nine, twelve months out, clearly if things start slipping, the Fed will lower rates. But given the growth we see right now, if you take a look at the futures and adjust them for risk premiums, as I do, virtually every cut has really been wiped out. Looking at history, that is actually a formula for higher long-term rates.

06. As you know, before year-end I said this could be the year of a correction. I don't think it's going to be a big collapse. Look at the VIX: I think it crossed 20 today and is a little lower now. That's a lot of hedging in the market. A lot of people say, oh my goodness, this could be a little bit of a dip. When you get VIX at 20, I don't see a big fall. But the thought I have to deal with is maybe a 5 to 5.5% long bond. How do I allocate in that case?

07. That especially matters for all types of stocks. Small stocks are hurt, because if the Fed doesn't cut, their interest costs remain high. Tech stocks don't borrow at those interest rates, but they have to worry about discounting, and since they have such high P/E ratios, a small change in discounting sends them lower. So both have been depressed, for different reasons, by strong economic growth.

08. By the way, no one mentioned today that wages came in at or actually below expectations. So it wasn't a wage-pressure situation. It was really: wow, this economy is moving ahead at this interest rate. Is that our R-star, or what we call the natural rate? We're very, very close to that now, maybe just a tiny bit restrictive, if at all.