Entries filed under 'Federal Reserve'

    A Pre-Fed Reality Check

    April 27, 2015 4:07 PM by Timothy Paulson

    As U.S. policymakers prepare to meet on April 28–29, here’s a status report for key asset classes.

    With U.S. Federal Reserve policymakers set to meet on April 28–29, we thought it would be a good time to take the temperature of key asset classes as the world awaits more clues about a potential “liftoff” in U.S. interest rates sometime in 2015. (In a follow-up post, we’ll look at how Lord Abbett is positioning its fixed-income portfolios in the current environment.)

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    The Fed: "Patient" Dies, Investors' Risk Appetite Lives On

    March 27, 2015 12:50 PM by Timothy Paulson

    What’s behind the surprising market reaction to the central bank’s March 18th policy statement?

    Financial markets recently were hanging on a single word from the U.S. Federal Reserve. Investors were eager to hear whether the Fed’s policy-setting arm, the Federal Open Market Committee (FOMC), would remove the word “patient”—used since December 2014 to describe the central bank’s stance toward maintaining its current zero interest-rate policy–from the statement issued at the conclusion of its two-day policy meeting on March 18, 2015. The central bank did indeed drop the word “patient” from the post-meeting communique, moving the Fed one step closer to “liftoff”—that is, the first in a potential series of interest-rate hikes.

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    The Fed: Don't Weird Out Over Normalization

    March 11, 2015 2:53 PM by Timothy Paulson

    Investors have been spooked by the prospect that the central bank will start raising interest rates. Here’s why they should stop worrying.

    The February U.S. employment report, released on March 6, continued a year-long string of monthly job growth in excess of 200,000. The fixed-income and equity markets both sold off dramatically in its aftermath, apparently fearing accelerated timing of interest-rate hikes from the U.S. Federal Reserve (Fed) in response to a strengthening labor market.

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    Central Banks: March Madness Ahead?

    March 4, 2015 4:08 PM by Zane Brown

    The differing policy paths of the U.S. Federal Reserve and the European Central Bank could have significant effects on fixed-income markets this month.

    We have explored divergence as a dominant theme for 2015 because investment opportunities may be driven by differences in economic growth rates, currency valuations, and monetary policies among nations. And this March may mark the inflection point for monetary policy divergence as the European Central Bank (ECB) begins quantitative easing (QE) and the U.S. Federal Reserve considers further refining the language it employs to signal its policy stance. Some observers believe the Fed will delete the word “patient” from its guidance as it prepares to normalize interest rates later this year. Policymakers had used the term in previous statements to describe the Fed’s approach to the timing of a potential interest-rate hike. 

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    The Fed's Waiting Game

    January 28, 2015 5:03 PM by Zane Brown

    The central bank acknowledged a strengthening U.S. economy in its policy statement on January 28, but reiterated that it will "be patient" in making policy moves. 

    Expectations that the U.S. Federal Reserve would change its language regarding the timing and amount of potential interest-rate hikes at its first policy meeting of 2015 were almost nonexistent. And with the statement released at the conclusion of its two-day policy meeting on January 28, 2015, the Fed did not disappoint. 

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