Closing Bell

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Closing Bell

Liquidity, Global Rates Seen Driving Markets


Investors hang on Ben Bernanke's words -- but two "Closing Bell" guests pointed out that the U.S. economy is being influenced by interest-rate decisions and other vital market stimuli from around the globe.

Russ Koesterich, senior portfolio manager at Barclays Global Investors, believes that a "Fed cut is still out of reach." He said that in order for rates to drop, labor costs will have to continue to drop, and capacity utilization will have to ease.

How does one invest in such an environment? Koesterich told CNBC's Maria Bartiromo that the key is liquidity -- and the market is seeing liquidity stream in from disparate sources, like the yen carry trade and recycled petrodollars. He suggests investors continue to be long, and he favors the technology sector.

Kevin Giddis, managing director of fixed income capital markets at Morgan Keegan, said that U.S. indicators like the PPI number helped buoy bonds, but revisions in retail caused the bond market to "stop and pause a little."

Giddis said a big source of anxiety that "looms on the horizon" is the question of whether the global "1997, 1998 situation" will recur. He explained that the Bank of Japan has a major meeting soon; their fixed rates are hurting the worldwide markets, and analysts are waiting to see if Tokyo will raise rates.