December witnessed one of the most telegraphed quarter point increases in the history of Fed funds’ rate hikes. With the Federal Reserve indicating more rate hikes in 2016, this promises to accelerate the divergence in policies versus its counterparts in Europe and Japan. This divergence could continue to provide a favorable environment for the US dollar. This could further put pressure on the US economy on one hand while lifting the European and Japanese economies on the other. If this happens, the Fed could slow down the rate hikes like ECB did in 2011. Irrespective of how it plays out, 2016 could be a favorable environment for strategies that are diversifiers to stocks and bonds.
Q4 Market Outlook
Categories: Newsletters/ By Robert Rotella, CEO, Rotella Capital Management, Inc.