September 2024 | The US Federal Reserve will begin its easing cycle this month, capping a remarkable period of restrictive monetary policy that has not been experienced since the early 1980s. The tighter policy stance has helped cool inflation and moderate economic activity. Now, the Fed hopes to ease off the policy brake in a way that preserves continued disinflationary progress towards its long-term 2% inflation target while also supporting their second mandate of "maximum employment". In this note, we highlight the uniqueness of this monetary policy cycle, how financial markets are anticipating significantly more policy easing than seen in recent easing cycles, and the financial market implications.
01 | This month's actions by the US Federal Reserve to begin its easing cycle will cap a remarkable period of restrictive monetary policy that has not been experienced since the early 1980s.
02 | Financial markets are anticipating significantly more policy easing than seen in recent easing cycles, which will have financial market implications.
03 | While US fixed income yields are reasonably attractive relative to the past 15 years, some fixed income markets have already moved ahead of the Fed this cycle, and we suggest caution in projecting prior easing cycle market performance onto the current market.
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