About the right amount of ‘dovishness’ seems to be the initial verdict from market commentators pronouncing on what had been billed as the biggest event in financial markets since the collapse of Lehman Brothers.
This Wednesday, investors’ eyes are once again on the Fed, which is widely expected to deliver its first rate hike since 2006. Across Europe, fund selectors have been impatiently waiting for this for months. There is one exception though: investors in Scandinavia prefer the FOMC to defer a first rate hike to next year.
There appears no way back now that Janet Yellen and her Federal Reserve colleagues have all but committed to raising rates on 16 December, and a quarter point rise is largely priced into markets already.
I am out of ideas. Over the past few weeks a growing sense of déjà vu has crept into everything I have tried to write.
People tend to dedicate most of their time to thinking through short-term solutions. While central banks saw QE as the easiest way to provide an imminent boost to their ailing economies, the current migration crisis is just as much a product of short-termist thinking.
Just like all their European counterparts, apart from the dovish Swedes and Danes, Finland’s fund buyers want to see a US rate hike sooner rather than later. But what does that mean for emerging markets, one of their favourite places to invest at the moment?
A rate rise by the Fed is long overdue, fund selectors in the Netherlands believe. Fund managers attending the Expert Investor Netherlands conference agreed and fiercely criticised the central bank for its alleged ‘backward guidance’.
The vast majority of fund selectors from Belgium expect their bond portfolios to return between 0 and 2% annually over the next 5 years, even though they are adding risk.
In holding interest rates at rock bottom this week, the Federal Reserve has set a dangerous precedent which may come back to haunt it, and the global economy.
The US Federal Reserve’s decision to hold interest rates in the 0-0.25% target range was met with muted response by investors, not surprised by the dovish tone.
With the most anticipated interest rate decision of recent times imminent, it seems the Federal Reserve is firmly stuck between a rock and a hard place.
Both fund selectors and fund managers have been bearish about US equities for quite a while, against a backdrop of the Fed planning to raise rates, possibly as early as this week. Now, Joachim Klement, chief investment officer of the Swiss fund consultancy Wellershoff & Partners, has provided a statistical back-up for their pessimism.
