Unsubscribe

Confirm you would like to unsubscribe from this list

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions

For Institutional / Wholesale / Professional Clients

The content on this website is intended for institutional and professional investors in the United States only and is not suitable for individual investors or non-U.S. entities. Institutional and professional investors include pension funds, investment companies registered under the Investment Company Act of 1940, financial intermediaries, consultants, endowments and foundations, and investment advisors registered under the Investment Advisors Act of 1940.

TERMS AND CONDITIONS OF USE

Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.

Disclaimers

Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.

Suitability

No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.

Termination

You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Decline

Give Us a Call

Fund Operations
800.847.0200

FIND ANOTHER CONTACT
Monetary & Fiscal Policy

Fed Tightens as Expected, but the Central Bank Is Not the Only Show

Jason Brady, CFA
President and CEO
21 Jul 2022
3 min read

July’s 75 bps tightening is important, but overshadowed by PCE and earnings reports.

The Fed released its statement following their two-day meeting that concluded on Wednesday, and consistent with expectations they raised the Federal Funds rate target by 75 bps to 2.25-2.5%. The FOMC’s statement shows that there were no dissenting votes, which I would potentially expect to change as the choice between unemployment and inflation control becomes starker. It will be increasingly challenging for Chairman Powell to maintain consensus in the future given a weakening of the economy (e.g. Purchasing Managers Indexes). albeit with still very strong inflation.

There were few changes in statement from the June FOMC meeting, but a small indicator that there is some slowing of economic activity. The market believes that the Fed is “on the job” now, and this gets the Fed to what they believe is a neutral monetary stance. Nevertheless, while the Fed may believe they are no longer behind the curve in the struggle to contain price pressures, I don’t think they will pause their tightening activity in September. The Fed’s belief that it reached a neutral stance on rates may be as accurate as its forecast for inflation to be transitory.

Markets have already priced in interest rate cuts later in 2023, and that indicates an expectation of some level of “normalization” either due to recession or a soft landing. Inflation will likely slow, but not dramatically decelerate on a year-on-year measure (both basis and sticky inflation for shelter).

In sum, the Fed is adjusting to what has felt like a new environment vs. what we saw before the pandemic. However, inflation above 9% is a failure, and they should feel that they need to allow themselves to be much nimbler. The central bank appears to have finally ended the practice of providing forward guidance. In an era of uncertainty we don’t need any central bank locking themselves in to a bad policy move, especially when they are communicating that they are data dependent. Clearly the worst mistake the Fed has made in some time was made in the context of refusing to adapt quickly enough to changing circumstances.

The financial markets interpreted Chairman Powell’s press conference as dovish but has been wrong about that over the last several meetings. Just because he hinted that future rate hikes may not be as aggressive as the 75 bps seen in June and July doesn’t mean that much as it had been decades since a 75 bps tightening. Mr. Powell kept returning to the strength in the labor market as the rationale to hike rates aggressively. But labor market data is a lagging indicator and more forward indicators, such as the monthly PMI, are moving lower. If inflation turns down notably, we’re safe from further dramatic rises. But that’s been a tough trade thus far.

All that said, the Fed is the least interesting part of the last week of July. We also had the first print of second quarter GDP and the personal consumption expenditures price index, as well as company earnings reports for nearly half of the S&P by market cap.

Around GDP, the question was whether it would be negative or not. It was. But I suggest not paying too much attention to that. GDP is a lagging indicator and unless it is significantly negative (or positive) there will be numerous revisions and nuances. PCE is much more important, and all the dynamics of the CPI number are critical here. My opinion is that the nominal GDP numbers have been ok, it’s just that we’re splitting the amount apportioned to inflation and real growth in a more negative way than expected. This will likely continue.

Finally, earnings. Company guidance has been and will continue to be critical. While thus far we’ve seen misses, expectations were low and the belief that these more challenged earnings are transitory has been a balm for the market.

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.
Subscribe

More Insights

Markets & Economy

Inflation: What to Expect in the Short, Medium and Long Term

Markets are oscillating between fears of inflation and rate hikes which will affect the real economy. This could continue for a while.
Markets

The Ghosts of Markets Past

We all know that past performance is not an indicator of future results, but how the markets have reacted to events in the past provides valuable perspective.
Global Equity

What Digitization Means for the Semiconductor Industry

As digitization continues uninterrupted, semiconductor market cycles should become less volatile, still market whipsaws open opportunities for active managers.

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.
This field is for validation purposes and should be left unchanged.