United States
The Fed’s Long Unwinding Road
Risks and challenges ahead on the U.S. Fed’s road to policy normalization examined in Global Macro Shifts.
Quantitative easing (QE) by the US Federal Reserve (Fed) has played an influential role in global financial markets over the past decade. In September this year, the Fed confirmed plans to begin unwinding its QE holdings in October. Yet asset prices have generally been unaffected by the news, reflecting a sense of complacency. Templeton Global Macro believes risks and challenges are ahead on the Fed’s road to policy normalization, with three factors that have potential to push bond yields higher than market expectations.
The Elephant in the Room
What lies ahead on the Fed’s road to policy normalization? Dr. Hasenstab discusses what he thinks the market is missing.
Economic and Market Implications of the Great Unwinding
What does the Fed’s quantitative tightening mean to investors? Dr. Hasenstab breaks down the forces that he thinks will likely take inflation and US Treasury yields to new highs.
Other Issues
- Environmental, Social and Governance Factors in Global Macro Investing
- Trade and Taxes in a World with Borders
- Latin America: The Rise and Fall of Populism
- How to Navigate Emerging Markets
- Emerging Markets: Mapping the Opportunities
- Inflation: Dead, or Just Forgotten?
- Japan: The Quest for Growth and Inflation
- China: Searching for a New Equilibrium
Contributors
What Are the Risks?
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets' smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets.
IMPORTANT LEGAL INFORMATION
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.
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