Fidelity Managing Director Jurrien Timmer recently shared his views on the US economy and Bitcoin.
Timmer believes that the market is returning to reality for the interest rate cycle as the economy enters a soft landing period and the FED is stepping back from its expectation that it will cut interest rates seven times in 2024.
Timmer's thesis remains that 2024 will see a bullish expansion. However, he believes the forward curve is returning in line with the 2025 points, although it remains ahead of the 2024 points. According to Timmer, it seems logical that long-term yields will also improve as some of the projected reductions in interest rates are canceled.
Timmer's bond model suggests 4.0-4.5% is fair value given the current slope of the forward curve.
Regarding Bitcoin, Timmer argues that Bitcoin remains a promising asset class. Based on weekly returns, the Sharpe Ratio remains at the top, while its correlation with the S&P 500 remains moderate.
Sharpe Ratio is a measure of the risk-adjusted return of an investment or portfolio. It was developed by economist William F. Sharpe and is widely used in finance to compare the expected return of an investment with its risk.
According to Timmer, Bitcoin is an extreme asset, which puts it either at the top or bottom of the leaderboard, but never in between. Timmer suspects that this extremity may eventually change if Bitcoin continues to evolve as an asset class.
*This is not investment advice.