![]() ![]() Opinions represent GIS’ opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. The information in this report was prepared by Global Investment Strategy. WFII is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company. Global Investment Strategy (GIS) is a division of Wells Fargo Investment Institute, Inc. In addition, every meeting will be accompanied by a press conference. *Indicates the meeting is associated with a summary of economic projections. September 20* | November 1 | December 13* | January 31 We believe fixed-income investors may want to consider implementing a barbell strategy by investing into the long and short end of the curve. We see asymmetric risk to the downside in risk markets. ![]() Given our expectation that the federal funds rate will remain elevated through year-end, we continue to position portfolios defensively. The July FOMC statement had very little change in language from the June release. The statement does make it clear that the FOMC is prepared to adjust policy as appropriate if risks emerge that impede the attainment of its goals. As the dis-inflation base effect wears off we think it will prove difficult for inflation to move to the Fed’s 2.0% inflation target. We think the market is still priced for a too-optimistic outcome regarding future Fed rate hikes. Treasury yields have peaked before the end of the tightening cycle but did not begin a clear declining trend until the tightening cycle was over. In the past five Fed tightening cycles since 1990, long-term U.S. The FOMC statement confirms that the Committee will continue to take into account the cumulative tightening of monetary policy, the lags with which monetary policy may affect economic activity and inflation, and economic and financial developments in its decisions at each meeting. The Committee remains highly attentive to inflation risks. The extent of these effects is uncertain. Continued developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. Job gains have been robust in recent months and the unemployment rate has remained low. Recent indicators suggest that economic activity has continued to expand at a moderate pace. The Federal Reserve (Fed) continues reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. The FOMC stated that “it will continue to assess additional information and its implications for monetary policy”. The Federal Open Market Committee (FOMC or the Committee) increased the federal funds rate by 0.25% to 5.25% – 5.50%.
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