Morgan Stanley IM: Fed’s Making a List, Checking it Twice for a Policy Rate That’s Naughty or Nice?
Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.12.12.2023 | 06:30 Uhr
- In this audiocast I will refer to real rates, more specifically the real neutral policy, r* aka r-star.
- A naughty policy rate is either too high or too low, one that then creates a recession or inflation.
- The nice policy rate is the one that perfectly balances the two and we achieve trend growth. This is r*.
- Recently, bond yields have dropped aggressively such that the market is pricing in five 25 basis point rate cuts in 2024.
- Why is this happening and what does it mean? Is it inconsistent with a soft landing? And what about asset prices? We explore in this audiocast.
See below for important disclosures.