Disinflation Pipeline and the Phillips Curve Fed
Jack Janasiewicz offers his tactical take on the capital markets in this podcast recorded on January 5, 2023.
- Global central bank policy and inflation were the key issues in December, as November Consumer Price Inflation data in the US surprised to the downside.
- Inflation is still high, and while there is more disinflation in the pipeline, the Federal Reserve is not close to declaring victory.
- US interest rates are likely to remain higher for longer, as this is a Phillips Curve Fed that links inflation and the unemployment rate together – and the labor market remains stubbornly tight.
- Policy changes by the Bank of Japan also reverberated through the global bond markets as the BoJ allowed its benchmark 10-year bond yield to move slightly higher.
- Meanwhile, the European Central Bank raised its deposit rate by 50 basis points, as expected – but indicated that rates would need to keep rising to combat high inflation.
- This global divergence in central bank policy will likely lead to differentiated growth outcomes for various regions – and across asset class returns.
Investing involves risk, including the risk of loss. The views and opinions are as of January 5, 2023 and may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. Although Natixis Investment Managers believes the information provided in this material to be reliable, including that from third party sources, it does not guarantee the accuracy, adequacy or completeness of such information.
Natixis Advisors, LLC provides advisory services through its division Natixis Investment Managers Solutions. Advisory services are generally provided with the assistance of model portfolio providers, some of which are affiliates of Natixis Investment Managers, LLC.
Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers, LLC. Natixis Investment Managers does not provide tax or legal advice. Please consult with a tax or legal professional prior to making any investment decisions.
CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.
5395279.1.1