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12:31
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Originally posted by Ryzie:
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The current valuations in BNPL are being re-rated lower due to the risk of increasing interest rates. Jerome Powell (US Fed Chair) made a comment late last week which spurred a sell off in US equities. His statement was along the lines of, "Now is probably a good time to retire the idea that inflation is transitory". This raised concerns for equity investors that interest rates will be hiked multiple times in 2022 and what we saw on Friday in US markets was an overreaction to those statements. The ASX as it does followed suit yesterday and BNPL stocks have been repricing lower over the last few months in anticipation of the same outcome to interest rates. We know this is an overreaction because before any moves are made to interest rates the Fed and RBA in Australia, have the ability to pull back on quantitative easing. US markets have posted gains overnight. Investment institutions are constantly processing large amounts of data and forecasting 12 months in advance, the slightest change from a news piece of news throws markets into a panic. Recovery hasn't even begun properly and the thing to watch is wage growth, unemployment rate and a pull back on QE. This will happen before interest rates.
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I would have thought if interest rates increase and inflation increase then more people would be looking at using bnpl options due to the sqeeze on their finances.
