Just because the market is celebrating the Fed’s policy u-turn doesn’t mean volatility is a thing of the past. Disconnects between fundamentals and assets prices don’t make for market stability.
The U.S. Federal Reserve has roiled markets with its latest rate hike and comments from Chairman Jerome Powell, who disappointed many investors as insufficiently dovish in his December 19 remarks.
Over the past couple of years, we added some high-quality floating-rate securities to the portfolios, believing the Federal Reserve would increase short-end rates at some point as both real gross domestic product (GDP) growth and inflation were low but notably positive.
