Sources stability oversight council tether12/12/2023 This would obviously mark a big change for cash investors, since short-term rates have been stuck near-zero since the beginning of the pandemic. At its December meeting, the Fed doubled the pace of tapering from $15B to $30B a month and updated the consensus forecast by FOMC officials to three rate hikes in 2022 (each assumed to be 0.25%). Let’s dive in.ĭOWNLOAD FULL REPORT Expect Interest Rates to Lift Off, but How High?Īs we discussed in our December whitepaper, the dual reality of rapidly increasing inflation and a tight labor market forced the Fed to radically alter its outlook for monetary policy. Which side wins out will have meaningful impact on the directions of interest rates and credit trends. Make no mistake, the economy is still in the tug-of-war of growth vs. With that said, we did not foresee curveballs on the covid variant front, namely Delta and now Omicron, that render existing vaccines less potent against the virus and make investment projections more challenging. Highly effective vaccines helped reopen economies sustainability became a major catch phrase in capital markets and among governing bodies and benchmark replacements went on without much fanfare. All three turned out to be right on point. After the research staff endured 20 months of work-from-home, I wanted to reward endurance by inviting them to each pick a theme for this look-ahead piece, hence the “three +1” themes of higher rates, supply chain recovery, ESG inroads, and cryptos encroaching cash.Ī year ago, our crystal ball told us that 2021 would be impacted by strong vaccine rollouts, ESG going mainstream, and SOFR replacing LIBOR as benchmarks. It has been our tradition to offer up three broad themes that will likely have the greatest impact on cash investments in the new year.
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