US

VantagePoint: Resilience in a Time of Uncertainty

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Global inflation has been higher and more persistent than most economists anticipated. In this edition of VantagePoint, we evaluate current inflationary and deflationary crosscurrents and the implications for investors. We continue to believe that predicting the future path of inflation is difficult to do well and that the best protection is a well-constructed diversified portfolio designed to meet the asset owner’s risk tolerance, portfolio objectives, and spending needs.

Fed Raises Rates and Begins Balance Sheet Run-off

Yesterday, the Federal Reserve announced it would raise the target range for the Fed funds rate 50 basis points (bps) to 0.75%–1.00%. It also formalized plans to reduce its $9 trillion balance sheet starting June 1, with an initial monthly cap of $47.5 billion, rising to $95 billion per month on September 1.

Higher Rates Are a Headwind, but US Housing Rests on Solid Foundations

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The US housing market has been on a tear in recent years, supported by low interest rates, favorable supply/demand dynamics, and a recent boost from the pandemic-related demand for more space. This publication provides an update on some of the macro forces supporting housing and describes different asset classes that offer exposure to US housing.

Decades of Data: United States 1900–2021

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The 2021 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.

Tighter US Monetary Policy May Limit Upside Potential of Risk Assets

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Central banks across the globe are poised to raise policy rates in response to inflation concerns. By examining how US policy rates have impacted US risk assets historically, we consider how assets may react today. These tighter financial conditions may cap the upside potential for risk assets. Within equities and credit, the risks are particularly pronounced in growth stocks and investment-grade corporate bonds.

VantagePoint: Jumpstarting the Energy Transition

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This year may prove to be pivotal in the transition from fossil fuels to renewables. Policy makers, businesses, and investors are accelerating commitments to bring greenhouse gas emissions to net zero by 2050, while technological advances and economics in sectors, like renewable energy and EVs, are reaching more competitive functionality and cost. Even as the energy transition gains speed, we are still in the very early days and anticipate a long and disruptive transition.