/perspectives/media/the-fed-is-being-held-hostage-by-the-market

The Fed Is Being Held Hostage By the Market

Scott Minerd, Chairman of Investments and Global CIO, calls in to Bloomberg TV to discuss monetary policy, trade, and the implications of negative global yields.

August 13, 2019

 

Key takeaways:

  • With inflation nearing policy objectives, the Federal Reserve’s primary objective is avoiding a recession, which it is likely to do by any means necessary.
  • Central banks around the world will follow suit, and record levels of negative yields are not likely to abate.
  • The Fed is now effectively committed to cutting rates by another 50 basis points this year. The question is when.
  • If the Fed acted swiftly and communicated effectively it would reassure the market and longer term rates would rise in anticipation of increased inflation and growth.
  • The 10-year Treasury note could slip to 1.4 percent in the near term, but we expect longer rates rise later in the summer.


Read the CIO Outlook: The Fed's Sugar High

 


FEATURED PERSPECTIVES

July 29, 2019

The Fed's Sugar High

Rational immigration policy, not rate cuts, is the way to avoid recession.

July 17, 2019

High-Yield Credit in a Fed Easing Cycle

High-yield corporate bond spreads and bank loan discount margins typically widen when the Fed is lowering interest rates.

June 17, 2019

Managing While Risk Premia Shrink

The Federal Reserve’s policy pivot has supported a rally in most credit sectors, but investors should worry about late cycle excesses.


VIDEO

Second Quarter 2019 Fixed-Income Outlook 

Second Quarter 2019 Fixed-Income Outlook

Portfolio Manager Steve Brown and Brian Smedley, Head of the Macroeconomic and Investment Research Group, explain that while the Federal Reserve's pause in policy has supported a rally in most credit sectors, investors should worry about excesses continuing to build this late in the cycle.

Core Fixed-Income Conundrum 

Solving the Core Conundrum

Anne Walsh, Chief Investment Officer for Fixed Income, shares insights on the fixed-income market and explains the Guggenheim approach to solving the Core Conundrum.







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