The Fed pauses for breath

The March FOMC meeting was really an admission the bond market had done a better job of picking the environment for growth, inflation and influence of global developments than FOMC members. This is why a key part of our process cross-checks themes at play in the market with technical analysis. The problem for the economy bulls is that the economic data is coming in weaker. The US economic surprise index is pointing in an entirely different direction to every other major economy, which are reporting better data as of late - the Atlanta Fed has a GDPnow forecast which utilises timely data to forecast GDP growth for the current quarter. We also run a version of this model as part of our process and both are currently indicating growth of around 0.5% this quarter. While the models aren’t great for point forecasts they have a good history of picking which side of consensus to be on. Click here to read more from Head of Income & Fixed Interest Vimal Gor (VIEW LINK)