The Fed Cuts Aggressively, but Remains Cautious About Future Cuts

The Federal Reserve has reduced the target range for the federal funds rate by 50 basis points (bps) to 4.75%–5.00%, the first reduction in over four years. This decision, while anticipated, marks a pivotal shift in monetary policy. The Fed also released updated economic projections, which highlighted it expects to reduce interest rates by a […]

September 2024

Would US Private Capital Flows into Climate Solutions Remain Strong in a Second Trump Administration?

Yes, we believe that private investment in climate solutions would continue apace in a second Trump administration, given strong demand for clean energy, supportive and resilient US government policies, and robust investment opportunities that will continue to be attractive to many investors. Long-term capital flows into climate solutions reflect market-driven structural tailwinds. The drivers of […]

September 2024

US Election Anxiety: Keeping Calm Amid Political Uncertainty

Markets have been jittery as the US presidential election approaches. The macro backdrop is shifting, with slowing economic growth and ebbing inflation meaning a cycle of monetary easing beckons. At the same time, elevated valuations for a variety of assets are causing investors to reconsider narratives around themes, such as AI investment, and consider asset […]

September 2024

VantagePoint: As the Narratives Turn

When investors doubt prevailing narratives, volatility tends to increase, with pricey and leveraged markets most at risk. This was the setting in July and early August as cracks formed in the narratives around artificial intelligence (AI) growth and an economic soft landing. The loss in faith amid high valuations amplified the decline as the Japanese […]

September 2024

Will Federal Reserve Rate Cuts Trigger Outperformance for Chinese Equities?

No, Federal Reserve rate cuts alone are unlikely to trigger sustained outperformance for Chinese equities. While the start of Fed rate cuts may help support the RMB and allow the People’s Bank of China (PBOC) to modestly ease monetary policy, it is unlikely to reaccelerate China’s economy and ease current deflationary pressures, both of which […]

August 2024

Do Emerging Markets Equities Deserve a Place in Public Equity Portfolios?

Yes. Emerging markets (EM) equities provide a fitting reminder that relative performance among asset classes varies over time, suggesting that investors maintain well-diversified portfolios to weather shifts in performance cycles. Neither the widespread underperformance of EM equities since the Global Financial Crisis (GFC)—nor a sustained period of EM outperformance—are without precedent. We are neutral on […]

August 2024

Should Investors Alter Portfolios Considering the Equity Market Rout?

No, not right now. We continue to believe investors should: (1) keep equity allocations aligned with broad policy targets; (2) maintain modest overweights in less expensive areas within equities, such as developed markets value and small caps; and (3) maintain a modest overweight in long US Treasury securities within bond portfolios. The potential for continued […]

August 2024

Are Inflation-Linked Bonds Attractive?

Yes. Inflation-linked bonds, particularly US Treasury Inflation-Protected Securities (TIPS), have become an attractive investment option, given elevated real yields and their unique diversifying characteristics. These bonds not only serve as a viable hedge against inflation but also enhance portfolio resilience in a variety of economic environments. These positive attributes make inflation-linked bonds a valuable component […]

July 2024