US macro/FOMC

Well, that was a straightforward and uneventful Fed meeting.

Here is the only change.

A few things worth noting.

The longer run neutral rate was revised up a touch. GDP and inflation were revised up a touch. Near term rate estimates were left unchanged.

That’s dovish.

The Fed mentioned explicitly that solid labour market outcomes do not preclude rate cuts. In other words, if inflation behaves, the Fed is happy to cut, because it would like to keep those good labour market outcomes going.

This is a backdrop that’s good for stocks, if the Fed view comes to pass. This is okay for bonds. You probably don’t get big capital gains, in this world, on the bond portfolio, but you do get your carry, and if the equities are chuggling along, the portfolios should still hit their targets comfortably.

The below from Nick FP is a useful snapshot of the FOMC projections (we tend to run off the SPF data, but they are near enough to be identical, given everyone forms a view based on the Fed).

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