BlackRock, Rick Rieder: rentebesluit VS en toelichting waren abnormaal normaal
Abnormaal normaal, zo omschrijft Rick Rieder de uitkomst van de FOMC-vergadering van gisteren in zijn commentaar. Rieder is CIO vastrentende waarden van BlackRock, dat $ 2,3 biljoen aan vastrentende beleggingen voor klanten beheert. Ook is hij medebeheerder van twee obligatiefondsen. De FOMC-vergadering was ongebruikelijk gewoon omdat de rente ongemoeid is gelaten en de daaropvolgende toelichting nauwelijks veranderingen bevatte – allebei zoals verwacht.
Rieder stelt verder:
• Terwijl er in andere landen aanzienlijke risico’s zijn voor de groei, draait de economie in de VS op een prima en stabiel tempo.
• De Amerikaanse economie creëert genoeg banen, al is het groeitempo van de werkgelegenheid iets gedaald. Bezorgdheid over het coronavirus kan tot volatiliteit leiden op de financiële markten en in de macro-economische cijfers; reden voor de Fed om de economische impact nauwlettend in de gaten te houden.
• Let daarom met name op wat Fed-bestuurders zeggen over de financiële omstandigheden, want die laten waarschijnlijk als eerste eventuele veranderingen zien in de koers van de economie.
Hieronder staat het volledige commentaar:
For what seems like an eternity, we have followed every word out of the Federal Reserve, and generally out of the other developed market central banks, to help discern the near- to medium-term trajectory of interest rates, liquidity and consequently the direction of risk assets domestically (with great influence on global assets too). Yet, today the economy is generally operating at a place that we have referred to as “1.8ish.” That is to say that the domestic economy is operating at a pretty good, and generally stable place today. The economy is creating enough jobs, albeit with some modest slowing in the pace of job growth, and the current state of labor markets can be roughly defined as around the Fed’s full employment goal. Furthermore, job growth is at a level that is creating decent wage growth, but without creating excessive inflation, though the Fed’s preferred measure of generalized price gains (core PCE) should approach the 1.8% level over the next few months. That is still below the Fed’s target level of 2%, however. And indeed, this rate of inflation is also very clearly far from what could be considered overheating conditions, which might begin to influence some form of policy-tightening.
Additionally, we think that this Fed, having witnessed inflation well below its target for many years, would welcome some higher levels of inflation and allow that persist for an extended period of time, before stepping in to change the trajectory of growth and/or inflation in the economy. Hence, while we didn’t see much different, or unexpected, in today’s Fed announcement and press conference, we nevertheless found the Chair’s expectation of ongoing, sustained expansion re-assuring, in that the Committee remains on the track that we expected. While that update is somewhat interesting, and this meeting addressed some technical details, these issues are not nearly enough to attract the market’s attention away from other gripping matters, such as the coronavirus, Mideast policy discussions and Chinese growth and trade dynamics.
Thus, while we have spent years following such indicators as the FOMC’s “dot-plot” for subtle indications of change to Fed policy trajectory, every word of the Fed statement for clues as to the next move in rates, or liquidity, and every statement by Fed officials in their other communications, today we find ourselves at a point in time that can be described as “abnormally normal.” The FOMC can sit back and watch the data develop domestically (and internationally) and build its perspective as to where interest rates and liquidity should go from here. This is a condition that feels almost hollow, given what our brains and market expectations have become acclimated to, and in terms of what has tended to drive markets and portfolio positioning; it feels abnormally normal.
Still, we have an awful lot to get our arms around today in terms of the potential risks mentioned above, so while we will pay close attention over the coming months to a couple of critical Fed signals and actions, particularly related to the liquidity that the Fed is infusing into the financial ecosystem, perhaps there are calming benefits to stable Fed policy. Two of the words that we will pay particular attention to out of senior Fed officials are “financial conditions.” Indeed, we believe that this factor has become significantly easier in recent months and at some point, the Fed will likely engage with the possibility of reining in some of the plentiful liquidity that it’s provided over year-end and each month since September.
That eventual policy evolution will have a tangible impact on markets, as the FOMC begins to consider changing its accommodative policy, and hence we will be watching for signs of how this might play out with great care and attention. For today, however, the mostly uneventful and expected set of statements, projections and press communication, feels abnormally normal, a sense we may get from these events for much of 2020. We think that the Fed is absolutely right in this policy stance today, and it (like us) will be closely watching all the developments that move the trajectory of growth and inflation over the next few months. Ultimately, we’ll get to the point in which things move back to what feels uncomfortably “back to normal,” with central bank tweaking of policy and its again growing influence over the economy and markets. For now, though, let’s at least be thankful for a calming Fed, amidst all the uncertainties and risks of these days.