Rosenberg says one Fed hike isn't the mistake, five would be

Key Points:

• The U.S. 10-year Treasury yield has surpassed 5%, a level not seen since before the 2008 financial crisis, as markets anticipate higher interest rates, with the Federal Reserve expected to raise rates on Wednesday.
• Economist David Rosenberg warns that the bigger risk lies in the series of rate hikes the market is pricing in beyond the expected increase, arguing that current economic data do not justify further tightening.
• Rosenberg critiques recent inflation and employment reports, suggesting discrepancies in the data and highlighting that wage growth—the key driver of sustainable inflation—is slowing, while rising energy costs are causing a cost squeeze rather than demand-driven inflation.
• Despite these concerns, the Fed remains focused on its 2% inflation target, with inflation measured by the personal consumption expenditures index running above target for years, and market expectations heavily favoring a rate hike.
• Rosenberg advises investors to consider buying long-term Treasuries due to attractive yields and expects bonds to outperform stocks in the coming months, while also noting that the key factor to watch will be the Treasury's issuance strategy announced on November 4.