EFIX - Fixed Income Investment Outlook Q3 2021: Course Correction Or Policy Framework Change?

• Faced with higher inflation numbers, the Federal Reserve has begun to create more meaningful parameters around its evolving stance on monetary policy.
• Although the changes could be less dramatic than many expect, we believe that investors should be prepared for higher market volatility and an upward bias on interest rates, even as an environment of strong economic recovery supports tight credit spreads.
• The rapid shift at the Fed meeting on June 16 is a subtle indication that the Fed will not hesitate to employ aggressive monetary policy adjustments if there are strong signs of significant upside risk to the inflation outlook.

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