The Fed Rate Hike
categories: Americas, EMEAI, Risk Management Analytics, Investing (Investment Management), Portfolio Construction and Optimization, Risk Management, Asia Pacific, Asset Owners, Hedge Funds, Equities, Fixed Income, Multi-Asset Class, SURYANARAYANAN Raghu, ACERBI Carlo, VERBRAKEN Thomas, Asset Managers (Quant or Fundamental)
The U.S. Federal Reserve is on the verge of raising short-term rates for the first time since the global financial markets crisis hit seven years ago. However, there remains considerable uncertainty about how well the Fed will fare in managing the exit strategy from its low interest-rate policy. Uncertainty about economic growth and inflation has become a central question for investors and policy makers and one that has crucial implications for the Fed’s exit strategy and investor portfolio returns. This paper stress tests three exit scenarios and quantifies their impact on asset class factor and global multi-asset class portfolio returns.