Beyond Bulls & Bears

On my mind: Staying on message
Fixed Income

On my mind: Staying on message

The Fed delivered another 75 bps rate hike and reiterated its Jackson Hole message: reducing inflation is now its one and only priority. But the Fed's forecasts still seem too optimistic, and this could feed extended uncertainty and volatility in markets. Our Fixed Income CIO Sonal Desai shares her thoughts.

On my mind: The Fed—do you hear me now?
Fixed Income

On my mind: The Fed—do you hear me now?

Fed Chairman Powell delivered a forceful and unequivocal message today at Jackson Hole, pushing back against market expectations of an early pivot back to rate cuts. Restoring price stability will require tight monetary policy for some time, he said, and the Fed will not waver when the labor market starts feeling the pain. Markets have taken notice, but will test the Fed’s resolve again, making for a volatile adjustment process in asset prices. Our Fixed Income CIO Sonal Desai shares her thoughts:

On my mind: Are we there yet?
Fixed Income

On my mind: Are we there yet?

Are we there yet? Fed Chairman Jerome Powell hedged himself carefully at the July press conference; markets heard it as confirming expectations that we are closing in on the terminal rate and that the Fed will likely start cutting again as early as March of next year. Our Fixed Income CIO Sonal Desai is not so sure—here are her thoughts:

On my mind: The Fed capitulates
Fixed Income

On my mind: The Fed capitulates

The Fed raised interest rates by 75 basis points in its June policy meeting, acknowledging continued upside surprises on inflation, inflation expectations and wage growth. It also de facto abandoned forward guidance. It was a reminder that economic data eventually rule the day, says Franklin Templeton Fixed Income CIO Sonal Desai. She argues this is a welcome but only partial move to a more realistic stance, and discusses why further hawkish surprises likely lie ahead.

On my mind: Overdue reality check for Fed and markets has barely begun
Fixed Income

On my mind: Overdue reality check for Fed and markets has barely begun

Franklin Templeton Fixed Income Chief Investment Officer Sonal Desai believes investors’ expectations that interest rates will not rise much may be very misguided.

On My Mind: The Fed Takes the Red Pill
Fixed Income

On My Mind: The Fed Takes the Red Pill

The Fed struck a hawkish tone at its latest meeting, but Franklin Templeton Fixed Income Chief Investment Officer Sonal Desai believes it still underestimates how far rates will likely need to rise—and so do the markets. She discusses what it will take to get inflation back under control, and how fixed income investors can position for the volatile rising-rate environment ahead.

On My Mind: The US Dollar and the Retreat from Globalisation
Fixed Income

On My Mind: The US Dollar and the Retreat from Globalisation

With the war taking a tragic toll in Ukraine and triggering a major shift in the geopolitical and economic order, Franklin Templeton Fixed Income CIO Sonal Desai discusses the implications for the US dollar’s status as dominant reserve currency, and for the pace of the energy transition.

On My Mind: Fed and Inflation: You Can’t Always Get What You Want
Fixed Income

On My Mind: Fed and Inflation: You Can’t Always Get What You Want

The Fed seems to have been caught by surprise by its own policy and says this is not the inflation it was looking for. Sonal Desai, Chief Investment Officer, Franklin Templeton Fixed Income, shares her thoughts on why inflation should not have come as a surprise and why investors need to brace for higher volatility as the Fed adjusts its policy stance.

On My Mind: To Work, or Not to Work…
Fixed Income

On My Mind: To Work, or Not to Work…

Of all recent economic trends, sluggish employment growth is perhaps the most important for investors to watch, says Franklin Templeton Fixed Income CIO Sonal Desai. She outlines why the labour market response will likely remain lacklustre for some time, and discusses the short- and medium-term market implications.

On My Mind: Leaving QE, Never Easy
Fixed Income

On My Mind: Leaving QE, Never Easy

This year’s annual economic policy symposium in Jackson Hole opens the six months that will likely define the legacy of the Powell Fed’s first term. The robust recovery, high inflation and record asset prices call for the Fed to wind down an extraordinary monetary easing that is also exacerbating economic inequality. But leaving QE isn’t easy, as financial markets have become overly dependent on Fed support. In her latest “On My Mind,” our Fixed Income CIO Sonal Desai discusses the Fed’s challenges and what they mean for investors.

On My Mind – Inflation: Nothing to see here. Really?
Fixed Income

On My Mind – Inflation: Nothing to see here. Really?

Prices continue to climb, with the US CPI rising in June by the most since 2008. Financial markets seem to be unfazed, but businesses and consumers appear considerably less sanguine. In her latest “On My Mind,” our Fixed Income CIO Sonal Desai discusses why inflation may be less “transitory” than many expect.

On My Mind: Something Has to Give
Fixed Income

On My Mind: Something Has to Give

There are differing opinions for why US Treasury yields have suddenly dropped. In her latest “On My Mind,” our Fixed Income CIO Sonal Desai outlines three possible scenarios and the logical implications of each; in the current constellation of asset prices, she argues, something does not add up.