Forward Guidance Higher Bond Yields To Wreak Havoc In 2025 | Jonny Matthews
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Jan 8, 2025 Jonny Matthews, a renowned portfolio manager with experience at Brevin Howard and Citigroup, shares his expertise on the economic landscape. He discusses the implications of Fed policy on rising bond yields and the resilience of the U.S. labor market. Matthews sheds light on the potential consequences of the Trump Administration's market strategies and offers insights into investment tactics for uncertain times, focusing on the intricate relationship between productivity, inflation, and economic growth.
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Resilient US Economy
- The US economy needs a major shock like a pandemic or financial crisis to enter a recession.
- Current growth is averaging 3% and expected to continue due to high job availability and strong household balance sheets.
Fed Aligns with Market
- The Fed's recent hawkish tilt aligned its expectations with market pricing, which anticipated fewer rate cuts.
- The market's hawkish view stemmed from data exceeding Fed expectations on GDP growth, inflation, and unemployment.
US Productivity Boom
- US GDP growth outpaced other developed economies due to productivity improvements, driven by flexible labor markets and IT investment.
- The US's approach to the pandemic, firing and rehiring workers, led to better sectoral reallocation and increased productivity.