The Federal Reserve has kept interest rates steady as inflation continues to cool. Wellington Management Fixed Income Portfolio Manager Brij Khurana joins Catalysts to discuss the state of inflation and how investors should navigate the bond market.
"The Fed said that they expect inflation to end this year at about 2.8% year over year. And they expect the unemployment rate to be about 4%. Well, guess what? That's where we're at right now. And so it begs the question if data deteriorates more than that, inflation comes down, the unemployment rate rises further, which we certainly think it will, then that one cut could easily become two," Khurana explains.
He adds that when it comes to the labor market, "quits rate suggest that there's not as much wage pressure as people think, job openings have come down," meaning unemployment could rise more than expected. He continues, "The Fed is in this tricky spot right now where Chair Powell did acknowledge that this is a two-sided type situation. But the reality is they are much more focused on the inflation part of their mandate because they look at the unemployment situation and say, 'this doesn't look that different than where we were pre-pandemic.'"
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12 июн 2024
