By Tiffany Wilding |
U.S. inflation outpaced consensus estimates for January, likely complicating the policy path for the central bank.
At the January 2022 meeting, the U.S. Federal Reserve signaled an accelerated timetable to normalize policy, but it will be a long process amid an uncertain environment.
The strong inflation report combined with employment data will likely prompt the U.S. Federal Reserve to begin hiking its policy rate in March.
A long-term focus and a rigorous approach to portfolio construction may help investors navigate uncertainty as the mid-cycle expansion advances.
The Federal Reserve pulls forward rate hike expectations and doubles the pace of tapering in an effort to provide more flexibility to react in 2022.
By Tiffany Wilding |
The risks of continued elevated inflation likely have the U.S. Federal Reserve considering material changes to its policy path.
By Tiffany Wilding |
Stronger-than-expected U.S. inflation data in October may prompt the Federal Reserve to consider tapering faster and hiking sooner.
The Federal Reserve navigated its tapering announcement without much market volatility, but faces the challenge of managing rate expectations amid elevated inflation risks.
By Tiffany Wilding |
Elevated risks to inflation expectations appear to have prompted Federal Reserve officials to revise their policy rate hike projections higher.
By Tiffany Wilding |
The U.S. Fed stopped short of providing “advance notice,” but a December tapering announcement remains likely.
Economic growth and inflation will likely peak in 2021 and then moderate in 2022 as fiscal and monetary policy support recede.
Buoyed by faster growth and higher inflation expectations, the Fed advances rate hikes to 2023 and broaches the topic of tapering.
Market participants have been hesitant to accept SOFR as the successor to Libor, but uniting around a single reference rate is increasingly important to keep benchmark markets from becoming fragmented.
We believe the U.S. is undergoing a large price-level adjustment, not shifting to a persistently higher inflation regime.
As regulators push to transition away from Libor, sales of Treasuries linked to the successor rate could boost the new benchmark’s credibility and expand nascent markets for related debt and derivatives.
By Tiffany Wilding |
To sustainably reach its inflation target, the Fed must raise inflation expectations – and that likely will require a period of above-target inflation.
Amid a brightening economic outlook, the Bank of Canada could begin tapering its bond purchase program this month, though we think it’s a close call and believe a cautious approach is warranted.
The expiration of the temporary SLR changes should enhance the soundness of the banking system, but likely at the cost of Treasury market liquidity.
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