Allianz Investment: Expects the Federal Reserve to remain on hold in March as uncertainty raises expectations for interest rate cuts

According to the Zhitong Finance APP, Michael Krautzberger, Chief Investment Officer of Global Fixed Income at Allianz Investment, commented before the Federal Reserve's interest rate meeting on March 19, expecting the Federal Reserve to hold steady at this meeting, maintaining the federal funds rate target range at 4.25%-4.50% for the second consecutive meeting.

Allianz Investment stated that due to the uncertainty in trade and fiscal policy under the new Trump administration, the market's outlook on the U.S. economy in 2025 has shifted since the beginning of the year.

U.S. economic data has cooled, and the outlook for consumer demand and business confidence has dimmed due to U.S. government policies. The U.S. stock and credit markets appear weak under the heavy pressure of this policy uncertainty.

Federal Reserve Chairman Jerome Powell recently reiterated his belief that "the U.S. economy is still in good shape," but confidence in the financial markets is relatively lacking.

Allianz Investment noted that at the beginning of this year, the market believed the Federal Reserve would cut rates at most once in 2025; however, in recent weeks, the market has shifted to expect three rate cuts. The yield on the two-year U.S. Treasury bond is at 4%, returning to the level before the U.S. election in November last year.

In the current macro and policy environment in the U.S., Allianz Investment believes the best investment approach is through a steepening curve strategy. However, considering recent market volatility, there is a preference for strategic trading around structural positions