The Fed delivers a dovish message

The FOMC projects zero rate hikes this year, says economic fundamentals are still strong

Time to read: 2 min

Going into the Federal Reserve’s (Fed) March 19-20 policy meeting, markets were focused on three main themes: economic sentiment, the so-called “dot plot” and guidance on balance sheet runoff. The outcomes were considered to be dovish by markets. In addition to leaving its policy rate unchanged, the Fed revised down its US growth outlook and announced plans to end its balance sheet runoff. Initial market moves pointed to easier financial conditions, with real rates trading lower, risk assets higher and the US dollar weaker. Overall, Invesco Fixed Income expects these developments to be positive for credit risk assets.

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US job growth disappoints for February, but long-term trends are still strong

Invesco Fixed Income doesn’t expect this reading to disrupt the Fed’s policy in the near term

Time to read: 2 min

US nonfarm payrolls increased by a disappointing 20,0001 jobs in February — markets had expected an increase of 180,000.2 Contributing to the disappointment was the performance of key sectors such as construction, leisure and hospitality, education and health services. We at Invesco Fixed Income do not put too much weight on a single payroll print (as emphasized in our January blog: Strong employment data may support Fed flexibility). Our research has shown that the longer-term employment trend has been a better predictor of economic growth.

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Fed raises rates and sticks with its solid economic outlook

Statement indicates normalization will continue

Time to read: 3 min

The US Federal Reserve (Fed) hiked interest rates by 25 basis points to a target range of 2.25% to 2.50% on Wednesday, Dec. 19, signaling it believes continued policy normalization is necessary despite a recent tightening in financial conditions (i.e. lending conditions). Below is our take on the Fed’s statement, its economic projections and Chairman Jerome Powell’s press conference.

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