CNBC’s Jim Cramer said Wednesday’s gains are likely to turn around as soon as Fed officials remind Wall Street of their hawkish stance on inflation.
“The moment the top of the Fed explained the obvious, today’s rise would actually disappear because it is incompatible with the Fed’s attempts to curb inflation. This rise was based on a dream.
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Stocks rose on Wednesday as the Bank of England announced it would buy back bonds to stabilize currency markets, a day after the S&P 500 hit new lows in a bear market.
Two-year U.S. Treasuries also fell to 4.1% from a yield of about 4.3%, in a “surprising” reversal for Cramer.
“It’s like the whole bear market turned into a bull market because other countries’ central banks, not ours, gave up fighting inflation,” he said.
The Bank of England appears to have given up on tightening the economy, at least temporarily, but Cramer warned the Fed was unlikely to do the same.
“Over the next two days, it is likely that many Fed officials will deny that they are going to turn a blind eye and claim that they have the courage to fight inflation.” He said.