Fed Retains Equity-Friendly Goldilocks Outlook
The FOMC raised the federal funds target to 0.75%-1% at last week’s policy meeting, but they did not change their baseline economic forecast. Additionally, the estimated terminal level for the policy rate and time horizon over which it is reached remains unaltered. The Fed’s ability to steepen the US Treasury yield curve has been stymied by bond investors who have embraced a so-called secular stagnation thesis, although it was felt that the arrival of the Trump Administration would change this backdrop. The financial press has erroneously stressed the short-term importance of oil prices and the exchange rate in determining inflationary expectations. ETF’s have been increasingly active across a range of financial asset classes in recent years due to their low entry costs. These are currently attracting fund inflows from retail investors into passive equity funds which are less concerned about baseline valuations than institutional investors, thereby raising the prospect of prolonged and elevated levels for popular metrics.
DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the intention of delivering independent global macro investment insights and new thematic long-term ideas to investors, along with an agnostic opinion of the markets.
Said DeSaque has over 29 years of experience working as a professional economist in financial services, primarily based in London. His working role has involved extensive travel around the world, bringing him into contact with investors of different cultural backgrounds and investment requirements. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist and Investment Strategist at US banks Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he became Head of the London Economics Department in 1996. This role allowed him to engage with senior investment professionals, alongside regulators and provided a unique perspective of market intelligence at work.
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