For more Morgan Stanley Research on the U.S. macroeconomic and
Fed policy outlook, ask your Morgan Stanley representative or Financial Advisor for the full report «FOMC: Time for Change» (Mar 2, 2017).
«As equity investors reassess
the Fed policy outlook, this forces a reassessment of equity valuations as well.»
Not exact matches
In September, when the
Fed's
policy makers last submitted their economic
outlooks, the median estimate implied two quarter - point increases in 2017.
As long as the market expects the
Fed to cut, the pressure on the stock market will be mitigated by an
outlook for some relief from present interest rate
policy.
But as she continually does, Yellen warned that «the economic
outlook is uncertain» and the
Fed's monetary
policy was not «on a preset course.»
«If the
outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage - backed securities, undertake additional asset purchases, and employ its other
policy tools as appropriate until such improvement is achieved in a context of price stability,» the
Fed's announcement stated.
The FOMC's annoucement after their meeting on Wednesday affirmed the
Fed's QE3
policy, offering no changes, while stating, «If the
outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage - backed securities, undertake additional asset purchases, and employ its other
policy tools as appropriate until such improvement is achieved in a context of price stability.»
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outlook on leadership [27:30] Creating new
policies based on fairness and truth [28:00] What people are missing about Ray's culture [29:30] Creating meaningful work and meaningful relationships [30:15] The importance of radical honesty [30:50] Thoughtful disagreement [32:10] Why it was the relationships that changed Ray's life [33:10] Ray's biggest weakness and how he overcame it [34:30] The jungle metaphor [36:00] The dot collector — deciding what to listen to [40:15] The wanting of meritocratic decision - making [41:40] How to see bubbles and busts [42:40] Productivity [43:00] Where we are in the cycle [43:40] What the
Fed will do [44:05] We are late in the long - term debt cycle [44:30] Long - term debt is going to be squeezing us [45:00] We have 2 economies [45:30] This year is very similar to 1937 [46:10] The top tenth of the top 1 % of wealth = bottom 90 % combined [46:25] How this creates populism [47:00] The economy for the bottom 60 % isn't growing [48:20] If you look at averages, the country is in a bind [49:10] What are the overarching principles that bind us together?
David Kotok, chairman at Cumberland Advisors, discusses the
Fed's
policy path next year, the impact of the rate hikes on the bond market and his
outlook for 2016.
That's when the central is expected to raise interest rates again, based on the 30 - day
Fed Fund futures prices, which gauge the market's
outlook on monetary
policy.
A sustained turn in inflation above this 2 % target, or even a sustained period of inflation hitting this target, could change the
Fed's
policy outlook in the coming years.
In a related statement,
Fed officials said: «Given the economic
outlook, and recognizing the time it takes for
policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent.»
Treasury yields fell Wednesday afternoon after the most recent update on monetary
policy from the Federal Reserve showed few signs that the central bank would ratchet up its pace of rate increases, even as the
Fed conceded that the
outlook for inflation had strengthened.
However, given the recent deterioration in the growth
outlook in Europe and several Emerging Market countries, our view is that Canada's larger share of exports will likely have a relatively larger «negative» impact on Canadian growth, and by inference cause the BoC to be more cautious raising
policy rates than the
Fed.
While reaching for yield has been successful in the past, we suggest increasing credit quality, increasing liquidity and reducing risk in an environment where the
Fed's
policy changes introduce a very different forward - looking
outlook.
Their greater flexibility allows the implementation of many of our key
outlooks this year: yields that move in very different ways depending on the maturity, as front end rates lead higher rates from
Fed policy changes, but back end rates look vulnerable from overpricing fears of deflation.
That different
outlook is captured in the figure nearby highlighting how the downside risks to bonds — in this case looking at short duration bonds — is masked in an era of zero interest rate
policy but is revealed when the
Fed begins raising rates.
Federal Reserve
policy makers are set to meet next week, and while there is little expectation that an interest - rate increase will be announced when the meeting ends on Wednesday, the latest economic reading could sway the
Fed's
outlook.
This spread gives an indication of the market's economic expectations, reflecting the
outlook for demand growth, inflation, and
Fed policy.
But among the
Fed officials who met in Washington this week, Powell said, «there's no thought that changes in trade
policy should have any effect on the current
outlook.»
Softness in the housing market, if it deepens and undermines the broader economic
outlook, could complicate the
Fed's efforts to dial back easy - money
policies designed to support the recovery.
An
outlook for the money market that includes the impact of tax reform,
Fed policy, and the potential for future regulatory reform and LIBOR replacement
Though the
Fed's post-meeting statement added a section highlighting that the economic
outlook had strengthened in recent months, he reiterated the aim of gradually normalising monetary
policy, while also pointing out the absence of signs of any imminent acceleration in inflation.
Their greater flexibility allows the implementation of many of our key
outlooks this year: yields that move in very different ways depending on the maturity, as front end rates lead higher rates from
Fed policy changes, but back end rates look vulnerable from overpricing fears of deflation.
While reaching for yield has been successful in the past, we suggest increasing credit quality, increasing liquidity and reducing risk in an environment where the
Fed's
policy changes introduce a very different forward - looking
outlook.
Even with the improved
outlook, a «strong majority» of
Fed officials voiced concern that a trade war would harm the economy, and some
policy makers said the recent turbulence in financial markets highlighted risks to growth, the minutes showed.