Monthly Investment Outlook: Global equity markets closed at the half year point higher, while global bonds fell as the Federal Reserve began to signal a pivot change – by potentially slowing the pace of its bond buying, i.e. ‘tapering’ –
Key takeaways Treasury yields and Treasury Inflation-Protected Securities have moved lower, despite higher inflation. Fed officials now project two rates hikes by the end of 2023 and appear to be ready to begin tapering of its asset purchasing program as
Below is a brief recap of the views of Tim Ng and Tom Hollenberg, fixed income portfolio managers and members of Capital’s interest rates team, regarding the Fed’s announcement on 16th June. Fed officials projected two interest rate increases by
This month delivered a surprise from the Federal Reserve, which appeared more hawkish due to the shift in the dot plots. However, after listening to Chairman Powell speak, we believe that little has actually changed. Yes, the Fed has an
The return of housing as an economic driver gives the Fed options. Home prices in the U.S. are booming and may continue to do so for a while yet. This will likely give the post‑coronavirus economic recovery a very different complexion
As expected, the FOMC maintained its current target range for the federal funds rate of 0.00 – 0.25% following its June meeting. It also indicated it would maintain its current pace of Treasury and agency MBS purchases totaling $120 billion
It is likely to remain above the potential rate for a while. After some wobbles on the back of the bond market sell-off, risk assets have performed strongly over the past month or so. Equity and corporate bond indices are
– The recovery phase of the US economic cycle is increasingly mature and looks set transition to its next phase in the coming months, a ‘mini-cycle’, similar to the long expansions of the 1990s and in the post-Global Financial Crisis
Global Asset Allocation – The View From Europe: The Federal Reserve has been consistent in its messaging that a near-term spike in inflation pressures will be transitory and recede once COVID-related impacts fade. The latest inflation print showed that prices,
The Fed may announce first asset tapering steps this summer. Should the health of the U.S. economy continue to improve at its current pace in the coming months, investors will have to prepare for a gradual normalization in Federal Reserve
US inflation looks set to rise significantly heading into the summer. Contrary to the view that this will be a temporary increase, a number of forces could combine to create greater structural pressure pushing prices higher for longer. Markets are
The recent rise in US yields offers opportunities for the EURO-based investor. But between economic recovery, the FED policy, the rise of inflation, and the fiscal stimulus, how to make the right choice for your fixed income portfolio ? Come
Weekly Economic Commentary: I watched the film “Apollo 13” again recently. For those too young to remember, a mission to the moon that launched 50 years ago almost ended in disaster; working feverishly, ground control was able to bring the
Evidence continues to mount that a combination of vaccinations and stimulus are creating some of the strongest economic growth data in decades. Even so, the Fed remains committed to easy monetary policy until unemployment falls further and inflation materializes.
Quarterly macro and market insights: Optimism on the US economic outlook increased as the COVID-19 vaccination rollout accelerated, and the new Biden administration embarked on expansive fiscal policy. The US$1.9 trillion American Rescue Plan Act was signed into law in
The asset class offers a low‑duration profile, attractive yields. Many investors tend to focus on bank loans only when there is a broad consensus about the Federal Reserve raising interest rates in the short term. While loans have historically performed
Fixed Income Outlook–2Q2 The US Federal Reserve’s new average inflation targeting framework means that the central bank will not raise policy rates until realised inflation has risen sustainably to above its 2% target. That is, it does not intend to
Just as the sudden shutdown of much of the global economy at the onset of the coronavirus pandemic in 2020 was unprecedented, the expected recovery in 2021 is likely to be unique. Developed market central banks seem determined to maintain …
The sell-off in US Treasury bonds reversed over the last week with the 10-year bond yield dropping from its intraday high of 1.75% on 18 March. The decline was driven principally by falling real yields as inflation expectations were mostly stable. There was also a reversal in the recent outperformance of value stocks relative to growth stocks.
Has the Fed Turned Hawkish by Allowing Bond Yields to Surge? It seems happy to let financial market conditions tighten. Surging yields on U.S. government debt are tightening financial market conditions, but the response to this from Federal Reserve Chairman
Tension on bond yields mounted over the week as investors began to fear a strong economic rebound might fuel inflation. The $1.9 trillion stimulus plan in the US could cause some sectors, like commodities, to overheat.
In January, the US Federal Reserve affirmed its commitment to low interest rates for a prolonged period of time under its new monetary policy framework. If anything, with its renewed focus on “broad-based and inclusive” maximum employment and a goal of achieving inflation that averages 2% over time, the …
In the US, reflation on the back of fiscal stimulus and the exit from lockdowns should lead to modestly higher inflation expectations and nominal bond yields. A renewed ‘taper tantrum’ looks unlikely as excess capacity and high unemployment rates will prevent …
The success of the Federal Reserve’s emergency intervention in March 2020 played a crucial role in stabilizing and improving liquidity in U.S. credit markets. The cessation of the Fed’s corporate credit facilities, in our opinion, lowers the risk of unintended imbalances within credit markets that could potentially …
It really is different this time. While this is not the first pandemic the US has faced, our reaction to it — the restrictions placed on portions of the US economy, and the policy response — are truly unprecedented. First, there are lots of reasons to be optimistic about the US economy over the longer term. Official productivity statistics likely understate the impact of innovation …
Markets | December 2020 Seek income in credit products. The US Federal Reserve’s aggressive response to the coronavirus pandemic has driven yields on safe-haven debt to near zero, leaving “low-risk” portfolios increasingly susceptible to interest rate-driven price volatility. We believe
T. Rowe Price Insights on Global Markets Our portfolio managers see selective potential in a range of asset classes. Even for those of us who saw reasons for hope this past spring, the market’s resilience in the face of the
Market GPS Chairman Jerome Powell recently introduced the Fed’s new monetary policy strategy with a renewed commitment to achieving an average inflation target. The policy will require allowing infl ation to run above 2% to make up for persistently missing
Global & Absolute Return Fixed Income For Professional Investors in Switzerland or Professional Investors as defined by the relevant laws Key takeaways: ■ The outcome of the US elections has reduced hopes of a large fiscal package being passed next
“The ultimate shape of either candidate’s infrastructure plan would depend heavily on the balance of power in the Senate.”
US Election Preview: All or Nothing The polls say Biden is the favoriete: With little time to go until the election, Biden has a substantial edge over Trump in the national polls, of around 10 percentage points. Biden has led
Spotlight In early-September, the US Federal Reserve Chair Jerome Powell announced a shift in the inflation containment policy regime that had been in place since the 1970s. Recall how, facing rapidly rising and eventually double-digit inflation, then Fed Chair Paul
European Gazette / Summer 2020 It’s been a tumultuous time for investors everywhere. Momentum is the key when looking at future prospects for stock markets and employment prospects across the continent Europe is now more than half a year into
Key takeaways Fed shifts policy to accept inflation above 2% target “for some time” Historic shift is unlikely to generate higher US inflation in the near term Key US inflation drivers not pointing to higher prices, despite COVID-19 stimulus
This spring, investors experienced one of the most volatile periods in modern market history. The speed with which financial markets sold off in March, and then rallied following unprecedented steps by the US Federal Reserve (Fed) and the US Treasury,
Monthly Op-ed The recent dataflow is consistent with our base case: the world’s economy is not experiencing a “V-shape” recovery, but rather is following a “swoosh” trajectory in which after an initial spectacular rebound, growth slows. Focus is again on
Miners Remain Undervalued Despite Gold’s Run The strong gains of July carried on to early August. Gold reached an all-time high of $2,070 per ounce on 6 August amid U.S. dollar weakness and new lows in treasury yields. Gold then
The Fed announced an inflection of its long-term objectives by making the 2% inflation threshold not a high limit, but an average objective over time, i.e. it will not harden not its monetary policy in the event of one-off inflation
Most U.S. Treasury yields increased modestly last week, led by longer maturities. The Federal Reserve (Fed) disappointed investors, as it did not expand long-duration asset purchases as some had hoped. The …
Last week started off on a strong note, helped by news on Monday of Gilead Sciences’ USD 21 billion acquisition of Immunomedics and chipmaker Nvidia’s USD 40 billion purchase of ARM Holdings. Software giant Oracle reported on …
Market Flash All eyes were on central banks. As expected, the Fed left its rates unchanged. It even said they would not move until inflation rose above 2% and stayed there for some time, a situation it does not expect
Key points The divergence between a decisive Fed and a more hesitant ECB is an interesting debate but it hides the fact that on both sides of the Atlantic monetary policy through its traditional transmission channels is facing diminishing returns.
#37 Next week, a lot of webinars are coming up. For example, on Tuesday Jupiter AM hosts a webinar about “The Great Inflation Debate“, on Wednesday UBP hosts a webinar on “Small Caps Specialties” and on Thursday Krane Shares hosts
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
Global Fixed Income Strategy In November 2018, the US Federal Reserve (Fed) announced that it would conduct a broad review of its monetary policy framework. The new framework will likely shape monetary policy in …
The bad news on the pandemic front in Europe are offset to some extent by the recent experience on the other side of the Atlantic. There, in the late spring hotspots, the propagation of the virus has been curbed again
Examining the resiliency of US government securities repo and clearance settlement in Q1 2020 The volatility between late February and early April 2020 was the largest stress event international capital markets have witnessed since the 2007-2009 global financial crisis. Unlike
Aggressive interest rate cuts, liquidity provisions and quantitative easing worked well. Buying facilities rather serve as a backstop. Based on a diminishing marginal effect from Large Scale Asset Purchases (LSAP), the Fed might do more for longer to support
Fixed Income Asset Allocation Insights Rising from incredibly low levels, improving economic data that suggest the imminent start of a recovery drove a sustained rebound in most fixed income asset classes in June. Markets remain highly dependent on the …
