Principal Asset Management’s Post

3 key themes in January’s Macro Matters: 1️⃣ Growth: Gradual slowing ahead 2️⃣ Inflation: Downward trend intact but still too high for the Fed’s comfort 3️⃣ Rates: Central banks on hold as financial conditions tighten Read the full report here. ⬇

More supportive monetary policies could help clear the clouds of a more challenging macroeconomic outlook in 2024. A pivot from central banks will be supportive to equity markets, but we believe with sticky inflation and potentially pedestrian earnings in 2024, a focus on quality growth stocks remains vital. https://bit.ly/3vbiNRl

Central Banks Signaling... #Oakbridge With Federal Reserve (Fed) officials making the rounds with their respective forecasts, the consensus has coalesced around the “higher for perhaps longer” message telegraphed at the last Fed meeting. Markets have been pricing in the probability of two rate cuts this year, especially if economic data suggests a cooling economic landscape with consumer spending slowing. Moreover, if the labor market weakens at a faster pace than anticipated, Fed Chairman Jerome Powell has remarked that the Fed would be prepared to initiate a rate easing cycle. Speak with us to discuss what this means for your portfolio

The Federal Reserve’s decision to keep interest rates unchanged while signaling a potential cut in September is a reminder of the delicate balance central banks must maintain. With inflation softening and labor market indicators showing some weakness, the Fed and other global institutions are cautiously navigating the path forward. This period of economic transition presents both challenges and opportunities for businesses, particularly those looking to innovate amid changing market dynamics. Buckle up, -- #FederalReserve #Economy #Context

How low will rates go? Late last year, markets expected the Fed to begin cutting interest rates in 2024. However, these expectations have changed with each new economic data release. In this report, we summarise the alternative data sources that can help predict changes to monetary policy and whether central banks are hawkish or dovish. We also summarise other data sources that help track general macro sentiment. Julia Asri Meigh reports here ➡ https://lnkd.in/eGzsaNCF

Have central banks won the war on inflation? In late October, Fed Chair Powell hinted rates could fall in 2024. Investors latched onto that view and promptly spent the last few torrid months of 2023 scrambling to position for aggressive rate cuts. Markets are now all-in on a deep rate cutting cycle. But how likely will this positioning be rewarded? Everything hinges on the inflation outlook. Check our latest issue of Ask Forstrong: https://lnkd.in/gc6ASk6u

2024 Investment Theme: Inflation and growth are past peak What does it mean? Developed market central banks have likely reached the end of their hiking cycles, but we believe markets may be underestimating the potential for both #recession and #inflation risks. Explore our outlook and investment ideas themes for the year ahead → https://bit.ly/3SZjR4k

It is hard to believe, but 2023 is coming to an end. Fortunately, both global equity and bond markets appear to be finishing the year on a strong note. This strength can be attributed primarily to two factors. First, the rate of inflation continues to show signs of moderating, raising expectations that central banks are at the end of their rate hiking cycles. And second, while growth has slowed – in some areas more than others – economies have generally handled the challenges better than expected.

As economic growth moderates and inflation cools a little bit further, central banks are eyeing rate cuts. Macro resilience should support equities and fixed income, and staying in cash remains the biggest risk for investors.

#Fed #ratecut Speculation is rife as the market eagerly awaits the Federal Reserve's decision on whether to cut rates by 25bps or 50bps (the most indecisive since 2007). This move comes after a 14-month hiatus following a rapid hiking cycle to combat inflation. With inflation now subdued and signs of economic weakness emerging, the Fed faces a crucial choice: front-load the cut or take a more cautious approach. Historically, Central Banks have been deliberate, read late, in their actions. What are your thoughts on the optimal strategy? Source: Bloomberg, ANZ