Investors are closely watching the Federal Reserve’s upcoming November meeting, questioning how aggressively the central bank might continue its rate-cutting cycle. Principal Asset Management chief global strategist Seema Shah joins Morning Brief to discuss the outlook.
Shah characterizes current economic data as "very, very volatile," emphasizing the seasonality within various reports, particularly in the labor market. While she notes that labor market reports indicate some cooling, it’s "nothing too concerning." However, she cautions against drawing conclusions from any data point when predicting the Fed’s monetary policy direction.
According to Shah, the broader trend of economic moderation suggests a normalization period is underway, which could ease some monetary restrictiveness. She believes a measured approach with 25 basis point reductions in November and December would be appropriate.
Regarding the impact on investors, Shah offered an optimistic outlook: "As we look out over the coming months because we’re expecting a soft landing, continued rate cuts, that is a sweet spot for risk assets. We think there’s continued upside for equities," she told Yahoo Finance, adding: "In this environment, you probably want to be extending duration."
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