Chart of the Week: A more dovish Fed

Markets have stabilised after the ‘Santa slump’ experienced into the year end, helped by comments from US Federal Reserve (Fed) officials suggesting they are moving towards more dovish market expectations. 

The coming week brings the Fed’s first rate-setting meeting of the year, where no increase is expected; markets seem to be penciling in just one or two quarter-point increases over the whole year.

Late last year, the so-called inversion of parts of the US yield curve fueled fears that the US economy was about to suffer a sharp slowdown due to aggressive Fed tightening. What’s a yield curve and why should its inversion induce such panic, you might ask? Read more about it, and our more sanguine view of what US yields are telling us in “Who’s afraid of the yield curve”, one of the articles in our latest InvestmentInsight.

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