BII Global weekly commentary The new regime of macro volatility is playing out with weaker growth, persistent inflation and volatile markets. We stick with our dialed-down risk stance. U.S. stocks slumped and yields surged on a renewed rise in core
Underpinned by waning inflation and strong job numbers in the US, equity markets started the month trending higher. Investors believed peak inflation would lead to a potential pivot in Federal Reserve (Fed) policy hawkishness. However, in his Jackson Hole speech,
The Federal Reserve has an explicit dual mandate. Managed Futures strategies have an implicit one – specifically, 1) deliver positive returns on average and 2) generate especially attractive returns during large equity …
May’s reprieve proved short-lived as recession joined inflation fears pushing equity/bond prices lower in June. Concerns have risen as the increasingly hawkish Fed rhetoric at its June meeting suggests a willingness to trade rising …
Weekly commentary – August 15, 2022 Stocks are rallying as markets believe inflation is waning and the Fed will slow hikes soon. We don’t think the rally is sustainable. Why? We see the Fed hiking rates to levels that will
China has once again captured the attention of investors seeking shelter from unprecedented global policy tightening. This is understandable, as the country was first in, first out of the Covid pandemic and remains ahead of the curve in terms of
The Federal Reserve did not surprise and raised its target range for the federal funds rate by 75 basis points to 2.25%-2.5%, referring to high inflation as its primary concern1 . A strong labour market supported a hawkish tone overall
Market Perspective Inflation concerns remain at the forefront for central banks and investors as global growth continues to trend lower amid supply disruptions, geopolitical challenges and reduction of liquidity, setting the stage for a challenging macro backdrop. The US Federal
June’s Consumer Price Index (CPI) was about the worst composition possible from a Fed perspective as it was (1) a broad-based increase that (2) accelerated. The base effect was supposed to be shading inflation down, but it’s been totally overrun
The US Federal Reserve’s (Fed) decision at its latest meeting to raise the fed funds rate by 75bp pushed expectations for the peak level next year to more than 4%. Simultaneously, fears that economic growth is slowing more quickly than
Federal Open Market Committee (FOMC) meeting and statement: On 15 June, the Fed hiked the Fed funds rate by 75bp, to 1.50-1.75%, the first 75bp rate rise since November 1994. Chair Jerome Powell confirmed that recent readings regarding consumer inflation
It is no secret that 2022 has been challenging for fixed income investors. High inflation and the US Federal Reserve (Fed)’s initiation of interest rate hikes have weighed on markets. Nevertheless, the broad credit universe provides ample opportunities for investors
The extent of the Q1 drawdown in fixed income markets was both large and rare relative to history. The aftermath of the pandemic and the conflict in Ukraine propelled inflation in developed markets around the world to multi-decade highs. In
Key Takeaways: The equity correction is likely over as recession is not 12 months away. Nominal growth remains extraordinarily high relative to Fed hawkishness. The US central bank remains “behind the curve” despite flagging 200bps of hikes by year end.
CROSS ASSET Investment Strategy – June 2022: The repricing of a more aggressive Fed stance has been brutal as the 10Y UST yield temporarily reached the 3% threshold, falling close to 2.75% recently on economic growth concerns. We think investors
Restrictive central banks and high inflation rates are likely to continue to weigh on the economic outlook. Macro outlook – The US Federal Reserve stays its course High inflation rates are increasingly permeating global economies, and sharp increases in commodity
With the US Federal Reserve in a full-on fight against inflation, concerns are rising that tighter monetary policy could tip the US economy into a recession. A look at longer-term financial cycles …
In conjunction with the Federal Open Market Committee (FOMC) meeting held on June 14–15, 2022, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year
Diverging economic outlooks in Europe, US and China, along with persisting geopolitical risks, underscore the need to explore relative value opportunities across asset classes. On duration, we think investors should be flexible but no longer as short as they were
In an eventful week in which the Fed raised interest rates by 50 bps, the loan market was not immune to the continued selling pressure and negative sentiment that has plagued performance in other assets for virtually the entirety of
Following the bond market’s recent beating, term yields have already priced in aggressive Fed rate hikes, positioning core bonds to effectively diversify credit risk.
Global equities retreated in the first quarter of 2022 in the face of higher inflation and the war in Ukraine. The US Federal Reserve has become even more hawkish despite the increasing threat of a significant slowdown in economic growth.
The lead time of curve inversion to recession can be more than two years, so it’s not the best timing tool. However, what we do know with more certainty is the signaling that the economy is now firmly in the
Our initial 2022 outlook themes generally played out as expected in the first quarter: strong but slower economic growth, persistently hotter inflation, the onset of interest rate hikes and further bouts of elevated market volatility. But two developments were unexpected:
The uncertainty caused by the war in Ukraine, the sharp increase in commodity prices, and the deterioration of supply chain issues are dampening the economic outlook. At the same time, the inflation risks have increased drastically. The Fed has promised
In a world of rapidly escalating prices, Russia’s invasion of Ukraine has exacerbated inflationary pressures. We have seen a direct impact on energy and a broad swath of agricultural commodities, and are likely to see a broadening of price pressures.
Through the melee of mounting inflation, flaring geopolitical risks and subsequently volatile capital markets, the U.S. Federal Reserve met market expectations and increased the target federal funds rate by 25 basis points (bps) while also validating market assumptions for how
Since the dissolution of the Soviet Union, more than three decades ago, the NATO had tried to encourage dialogue with Russia. But, since 2014—when the previous severe political crisis between Ukraine and Russia took place, most of the cooperation efforts
When market volatility spikes, investors question what, if anything, they should do. Markets reacted strongly to news that Russia invaded neighboring Ukraine. The world has been watching tensions in the region escalate since the beginning of the year. Russia objects
In our view, the Federal Reserve (Fed) has two choices to make for their stance on future monetary policy: to normalize or ‘Volckerize.’ The latter refers to Paul Volcker, Chair of the Fed most remembered for raising the fed funds
The geopolitical crisis in Ukraine creates a stagflationary shock for global economies. Rising commodity prices have the potential to add momentum to already runaway inflation. Higher goods and services costs may hurt consumer confidence and create a drag on economic
The tragedy unfolding in the Ukraine has been the main focus for financial markets this week. The impact on global economic growth remains to be seen, but we believe that the US Federal Reserve will start tightening monetary policy by
In the light of rising inflation numbers, central banks have made sharp hawkish shifts. The Fed is now expected to hike rates five times this year and to start rolling off its balance sheet. Even the ECB is expected to
BII Global weekly commentary We up our strategic overweight to developed market (DM) equities, but near term elevated geopolitical tensions keep our tactical shopping basket on hold. Equities retreated as investors took renewed fright over the military stand-off involving Ukraine,
The geopolitical escalation at month’s end marks a further rise in volatility, even as the Fed and the ECB displayed hawkish overtures earlier. We suggest a more cautious stance in credit amid rising liquidity risks and a less appealing risk/return
In the light of rising inflation numbers, central banks have made sharp hawkish shifts. The Fed is now expected to hike rates five times this year and to start rolling off its balance sheet. Even the ECB is expected to
January’s market tantrum: Last month played out like Newton’s third law of physics with a twist: for every feared Fed action, there was an equal and opposite overreaction. The 10-year Treasury yield spiked 27 bps, and U.S. large cap growth
January’s market tantrum: Last month played out like Newton’s third law of physics with a twist: for every feared Fed action, there was an equal and opposite overreaction. The 10-year Treasury yield spiked 27 bps, and U.S. large cap growth
In our view, the Federal Reserve (Fed) has two choices to make for their stance on future monetary policy: to normalize or ‘Volckerize.’ The latter refers to Paul Volcker, Chair of the Fed most remembered for raising the fed funds
Outlook 2022: As we head into a new year, it’s clear in hindsight that the market downturn of 2020 was short-lived and entirely related to the COVID-19 outbreak. In my view, that means the powerful upswing in equity prices since
January’s market tantrum: Last month played out like Newton’s third law of physics with a twist: for every feared Fed action, there was an equal and opposite overreaction. The 10-year Treasury yield spiked 27 bps, and U.S. large cap growth
Stubbornly high inflation numbers have sparked nervousness among central banks, which are rapidly reverting to hawkish policies. The Fed is now expected to raise rates five times this year and to start rolling off its balance sheet. The ECB …
Ons model toont welke opkomende landen wellicht het meest kwetsbaar zullen zijn voor Amerikaanse renteverhogingen en welke het meest veerkrachtig zouden moeten zijn. Wanneer Amerika niest, vat de wereld kou. En wanneer 's werelds grootste economie de rente verhoogt, voelen
The Fed has told us it will soon raise rates. History suggests equities and short duration bonds will outperform over the coming months. The late start to this tightening cycle may complicate matters. So now we know – the Fed has
FOMC statement: The tone of the Federal Open Market Committee (FOMC) statement was hawkish, with a focus on higher inflation risks and more aggressive policy tightening. There were notable changes to the statement: the Fed retired the word ‘transitory’ to
Multi Asset Quarterly: The economic growth outlook is strong, driven by a resilient consumer, low inventories and infrastructure spending. The rapid rise in Omicron cases, however, may limit the service sector’s recovery in Q1 and push out the economic normalization
Key points The surge in inflation in 2021 combined with the sharp fall in unemployment leaves two of the US Federal Reserve’s key policy objectives within reach as the year comes to a close. Moreover, with US housing prices rising
Three hikes in 2022? At its December meeting, the US Federal Reserve left policy rates unchanged, near zero, while signaling a willingness to hike as many as three times in 2022 to combat inflation. It also announced an acceleration in
Core government bond yields were lower and yield curves flatter last week (see chart of the week). More hawkish rhetoric from the recently reappointed Chair of the US Federal Reserve has upset the short end of markets, forcing yields higher.
As U.S. inflation is hitting three-decade highs, market talk has been all about “liftoff:” When will the Federal Reserve and others start raising their policy rates? This is old news in emerging markets (EMs), where many countries have already raised
