Amid an unsettled global economic outlook and elevated equity valuations, bond markets present attractive yields and important diversification benefits.
Macroeconomic uncertainties prompted the Federal Reserve to signal a slower pace of policy rate cuts in 2025 and beyond.
In a week with a U.S. presidential election and market volatility, the Federal Reserve cut its policy rate 25 basis points (bps) as expected. Amid this noise and the generally positive messages from recent macro data, Fed Chair Jerome Powell emphasized that downside economic risks had decreased, but the policy rate remains above neutral, suggesting that gradual cuts are still likely to come over time.
In the wake of pandemic shocks, economies appear more “normal” than at any time since 2019. Yet policy rates remain elevated.
We believe the Fed is on a path to continue to cut rates over the next several meetings to realign monetary policy with a now more “normal” U.S. economy.
The central bank’s latest policy statement and Chair Jerome Powell’s remarks suggest that an initial interest rate cut could come as soon as September.
A second straight month of encouraging U.S. core CPI data supports an initial Federal Reserve rate cut as early as September.
Good news on U.S. inflation in May did not sway the Federal Reserve to signal interest rate cuts could come sooner.
April’s U.S. inflation report likely offers some comfort to Federal Reserve officials, but rate cuts are unlikely until we see a more substantial deceleration in inflation.
Despite the reacceleration of inflation and enduring labor market strength, the Fed remains focused on downside risks.
The March U.S. inflation report and other macro data will likely prompt a change in the Federal Reserve’s trajectory in 2024.
The global investment landscape is set to be transformed in the months ahead as the trajectories of major economies diverge more noticeably.
Federal Reserve officials appear locked in for multiple rate cuts this year, despite inflation reaccelerating – raising questions about the speed and timing of this easing cycle.
The Federal Reserve sees progress on inflation, but wants more certainty before it’s prepared to lower the policy rate.
The market anticipates a swift shift in the Fed cycle.
U.S. inflation cooled more than expected, and bond markets rallied, but the Fed is likely to remain in a long pause.
Tighter financial conditions prompted Federal Reserve officials to take a step back from data dependence, and suggest a higher bar for future hikes.
The latest inflation report raises the odds of further Federal Reserve action.
Our September Cyclical Forum was the first to be held in London, where the economic situation today reflects what’s happening around the world.
The spike in bond yields presents an opportunity for fixed income investors to earn capital gains and diversify portfolios.
The Federal Reserve forecasts only a modest uptick in U.S. unemployment next year as inflation cools, but history and current labor market trends make us less certain.
Amid an outlook for slower growth and more moderate inflation, the Fed shifts to data dependence.
After stubborn U.S. inflation in the first half of 2023 kept the Federal Reserve raising rates, June’s softer inflation report suggests July may mark the end of the hiking cycle.
The Federal Reserve paused in June but raised its estimates for the policy rate later this year. We expect a July increase but remain skeptical about subsequent hikes.
March inflation data may put the Federal Reserve close to its terminal policy rate this cycle, if it hasn’t already reached it.
History suggests the lagged economic effects of tighter central bank policy are arriving on schedule, but any eventual normalizing or even easing of policy will still likely require inflation to decline further.
Slower credit growth may curtail broader U.S. economic growth, taking pressure off the Federal Reserve.
The failure of Silicon Valley Bank raises questions for Fed policy and economic growth.
Strength in employment and inflation has caused markets to raise the implied terminal rate while still expecting the Fed to normalize policy – which is different from easing – in 2024.
U.S. inflation may not be moderating as quickly as many were expecting.
Investors face mixed signals between the Federal Reserve’s policy guidance and recent economic developments.
After enduring one of the worst years on record across asset classes, investors should find more cause for optimism in 2023, even as the global economy faces challenges.
Falling prices for cars and holiday discounting contributed to softer U.S. inflation, creating more room for the Fed to potentially dial back its hawkish stance.
Core inflation came in below expectations for October and should moderate in 2023, but likely with bumps in the road ahead.
The Federal Reserve’s November statement included dovish language, but Fed Chair Powell warned investors not to expect the Fed to stray from its full focus on fighting inflation.
Core inflation in the U.S. outpaced expectations for September and may fortify the Federal Reserve’s hawkish resolve.
This is a critical time for investors and policymakers alike.
The Federal Reserve released new economic projections suggesting interest rate hikes will be faster and larger than previously forecast.
The Federal Reserve may be pressured to target a higher terminal fed funds rate as it seeks to tame U.S. inflation expectations following strong price rises in August.
In Jackson Hole, Federal Reserve officials unequivocally emphasized their commitment to bringing inflation under control – even as the U.S. economy slows.
Despite price declines in many sectors, the Federal Reserve may continue its hawkish approach.
The Federal Reserve affirmed its commitment to price stability, hiking its policy rate 75 basis points again and signaling more tightening to come.
June’s U.S. CPI (Consumer Price Index) inflation data likely set alarms blaring in the minds of Federal Reserve officials.
June’s U.S. inflation data will likely force central bankers into more restrictive territory – raising the odds of recession.
The January U.S. CPI (Consumer Price Index) report indicated a higher pace of inflation than many observers expected.
Much of the global economy has transitioned quickly from an early-cycle recovery to a mid-cycle expansion that now appears to be rapidly progressing toward late-cycle dynamics.
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.
Uncertainty has become an ongoing theme in markets, economies, and communities everywhere, and in this environment, PIMCO investment professionals gathered – virtually, once again – for our recent Cyclical Forum.
