The Federal Reserve is expected to cut interest rates twice this year and begin cutting interest rates in July, but there is a risk of hawkish tendencies.
The Zhitong Finance App learned that Thomas Poullaouec, head of multiple asset solutions at Pulisz Asia Pacific, and his team published a report stating that the Federal Reserve is expected to cut interest rates twice this year and start cutting interest rates in July, but there is a risk of hawkish tendencies. Pryce pointed out that due to stable growth and moderation in inflation, positive profit trends, and the expectation that the upward trend in the market will expand to shares other than large stocks, it will further increase the degree of allocation to stocks.
Pryce pointed out that recent US data reflects the persistence of inflationary stickiness, which heightens market concerns about the Federal Reserve's delay in cutting interest rates. As inflation and employment data record three unexpected increases in a row, it will be difficult for the Federal Open Market Committee to prove the need for interest rate cuts in June, and it will be difficult to uphold its expectations of cutting interest rates three times in the March Economic Forecast Summary.
The bank expects the Federal Reserve to cut interest rates twice this year. However, if inflation and labor market data do not improve significantly before the July meeting, the Federal Open Market Committee may not be in a position to cut interest rates this year.
Pryce further allocates higher shares. In terms of fixed income, it retains assets to hedge against inflation to cope with rising inflation, while reducing the allocation of long-term bonds, as US bond yields are still likely to rise further. The bank maintains a high allocation of high-interest bonds and emerging market bonds due to the attractive level of US bond yields and reasonable support from the basic mask.