CSTNL - Evolving Fed Expectations And Asset-Allocation Implications

2024-05-03 03:20:00 ET

Summary

• The current macro backdrop is slightly atypical for an impending Federal Reserve easing cycle - growth and labor markets remain strong, while inflation levels are elevated despite progress over the past year.
• The policy backdrop is also notable as Federal Open Market Committee members broadly see current policy levels as restrictive.
• In our opinion, the implications for multi-asset investors remain positive for equities. We believe reflationary macro conditions and a peak in the fed funds rate (our base case) are supportive regimes for risk-taking in portfolios.

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