Weekly Impressions: The new normal - Low and slow

Sam Ferraro

Global Founders Funds Management

The second consecutive strong non-farm payrolls report will offer the Federal Reserve more confidence to engage in lift-off at the FOMC meeting later this month. Non-farm payrolls grew by over 200k in the month of November, while the unemployment rate held steady at 5%. Evidente remains of the view that the Fed will be committing a policy error by undertaking lift-off at a time when core inflation is undershooting its 2% target by over 50 basis points. But of some comfort is an evolution of communication evident from Fed officials that the new normal of monetary policy normalisation will be low and slow, which should reduce the likelihood of a broad based sell-off in risk assets. Given the recent run of disappointing monthly inflation outcomes, market participants were clearly expecting more stimulus from the ECB. If core inflation continues to undershoot its target by such a long way, Evidente expects a more aggressive stimulus response at the next meeting of the Governing Council. (VIEW LINK)


Sam Ferraro
Senior Portfolio Manager
Global Founders Funds Management

Managing Director of Global Founders Funds Management, Sam has over 20 years experience in financial markets, with Merrill Lynch, JBWere and Goldman Sachs.

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