Market Outlook · September 01, 2020

The Fed's New Course and What it Could Mean for Investors

Brent Ciliano

CFA | SVP, Chief Investment Officer

1 Key points of the Fed's new path

The bottom line is that the Fed will be letting inflation and employment levels run higher in a shift that will likely keep interest rates low for years to come.

2 What is average inflation targeting?

AIT focuses more towards achieving an average level of realized inflation in and around the Feds stated 2% inflation target rather than hiking rates as inflation nears or is at their targeted inflation level.

3 What might this mean for markets and investors' portfolios?

Fixed income might not offer the same level of portfolio protection it has demonstrated in the past if economic conditions were to worsen. Investors may need to allocate more of their portfolio dollars toward the return generating portion of their portfolio to compensate for lower yields and lower returns.

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