A healthy pause

Also Interesting

• Primer on municipal bonds: What investors need to know (PDF)
• Protectionism
• The equity outlook likely hinges on corporate earnings

Macro Monthly

• Fed policy tightening was a headwind for risk assets in 2018, particularly as broader investor concerns about slowing global growth increased towards the end of the year
• In an important regime shift, the statement and press conference of January’s FOMC meeting confirm the Fed is not committed to any further hikes this cycle
• Further hikes are only likely if core inflationary momentum, which remains muted, accelerates sustainably in concert with improving external demand
• In our view, investor concerns that this shift in policy regime is evidence that the Fed has already overtightened are misplaced
• We believe that given this regime change the Fed should not be on investors’ list of major concerns for 2019—nor an obstacle for further healing in risk assets over the coming year
• A more accommodative Fed policy is likely negative for the USD, supportive to risk assets and particularly helpful for emerging market debt