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.
By Tiffany Wilding |
The Federal Reserve’s communications following its March meeting should help anchor inflation expectations.
By Tiffany Wilding |
The COVID-19 relief bill has spurred talk of inflation, but financial stability may be a more relevant risk.
One year since the inception of one of the most severe recessions in modern history, women’s engagement in the labor force is crucial to the economic recovery.
A large fiscal package geared toward pandemic relief will likely boost U.S. growth even further in 2021, but long-term inflationary risks are still balanced.
With a narrowly Democratic Congress, U.S. fiscal spending is likely to increase on economic relief from the pandemic, infrastructure, and healthcare, boosting the economic rebound.
By Tiffany Wilding |
Rising prices in July have led PIMCO to raise its core inflation forecast for 2020, but not 2021.
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