THE FED IN 2019: MORE DATA-DRIVEN, NOT YET PAUSING
We expect the Fed to deliver at most four more hikes. The one at the December 19 meeting will likely be followed by two rises in the first half of next year; the last one will depend on the state of the US economy at the end of 2019.
- Focal Point
- 12/12/2018
Highlights:
- We expect the Fed to deliver at most four more hikes. The one at the December 19 meeting will likely be followed by two rises in the first half of next year; the last one will depend on the state of the US economy at the end of 2019.
- As the cycle matures and the impact of past rates feeds through the economy, the Fed has to switch from a predetermined course to a more careful assessment of the economic prospects. In this sense the comments by Powell and Clarida reflected more a statement of the current conditions than a change in strategy.
- The switch to a more data-driven ratemaking occurs at a time when evidence of a moderation in growth starts to emerge and the risk of an inflation overshooting dims.
- Market reacted strongly, and now are underpricing the Fed’s resolve to stick to its plans. We expect a reassement, in line with our outlook of higher US interest rates, as data show a resilient economy with inflation grinding higher.
Read the full publication below.
RELATED INSIGHTS
READ NOW
COVID-19 FACTS & FIGURES
Oxford University/AstraZeneca vaccine will undergo a new global trial as critics questioned the claim that it could protect up to 90% of people against coronavirus. Hetero, one of India’s leading pharmaceutical companies, agreed to produce over 100 million doses of Sputnik V vaccine. Brazilian president Jair Bolsonaro said he will not take a coronavirus vaccine.
Generali Global Infrastructure launches two infrastructure funds to support the European recovery
Milan – Infrastructure assets are considered key in re-shaping a sustainable and resilient recovery path for Europe together with a greener, more digital and people-centered world. To support this transformational shift Generali Global Infrastructure1 (GGI), a boutique focused on infrastructure debt and part of Generali Group’s multi-boutique asset management platform, has launched two infrastructure funds supporting the European recovery.
EUROPEAN DEFAULTS LIKELY TO STAY LOW
Since March, credit markets have retraced a large part of
the Covid-related spread widening, alongside rebounding
risk sentiment. Although the rally has been substantial, it
has remained defensive with IG outperforming HY on a beta-
adjusted basis. The main reason in our view have been concerns about rising defaults.
