Center For Investment Excellence
How soft would a soft landing be?
Feb 23, 2024
Discussing the Fed's commitment to reducing rates, bond markets' response, and the uncertainty of when policy easing will begin. Exploring the potential for a soft landing in the economy, with predictions of gradual growth moderation. Analyzing high quality fixed income appeal, asset allocation strategies, credit opportunities, and insights on high yield investments and risk management.
18:26
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Quick takeaways
- The Federal Reserve's policy easing supports a soft landing scenario for the US economy, benefiting risk assets and strategic asset allocation.
- High-quality fixed income investments offer attractive real yields and diversification benefits, acting as a hedge in different economic scenarios.
Deep dives
US Economy in a Soft Landing
The US economy is currently experiencing a soft landing, with unemployment below 4% and GDP slightly above potential. Despite some inflation volatility, the overall trend is towards inflation heading lower, particularly in the service sector. The Federal Reserve's shift towards normalization and policy easing, such as cutting rates and tapering QT, supports this soft landing scenario. This environment is positive for risk assets and provides opportunities for strategic asset allocation based on the current business cycle.
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