Novi: The Federal Reserve maintained interest rates at the July meeting, with the maximum impact of inflation expected to emerge by the end of the year
Tony Rodriguez, Head of Fixed Income Strategies at Nuveen, stated that the Federal Reserve's decision to keep interest rates unchanged at the July meeting presents a dual challenge of slowing economic growth and the distorting effects of tariffs. The most significant impact of inflation is expected to emerge by the end of the year, with the core inflation rate projected to remain around 3.0% in 2025. Despite the slowdown in economic growth, Nuveen believes that the U.S. can avoid a recession, with a projected real GDP growth rate of about 1.0% in 2025. Municipal bonds and preferred loans remain attractive, with ample market opportunities
According to the Zhitong Finance APP, Tony Rodriguez, head of fixed income strategy at Nuveen, pointed out that the Federal Reserve maintained interest rates at its July meeting and emphasized that the slowing economic growth and the distorting effects of tariffs are creating a dual challenge. Although overall GDP data is quite volatile, actual economic growth is still gradually slowing under persistent uncertainty. Tariffs are expected to be further raised, which typically takes several months to fully reflect in consumer prices, so the maximum impact on inflation data is expected to emerge around the end of the year.
Nuveen expects that U.S. economic growth will continue to slow but can avoid falling into recession. The core inflation rate is expected to remain around 3.0% in 2025, which may suppress real income growth and drag down overall economic performance. Fixed income investments may continue to be pressured due to uncertainty. Nuveen predicts that the U.S. real GDP growth rate will be about 1.0% in 2025; as the negative impact of tariffs diminishes, it is expected to rebound to about 1.8% in 2026.
Nuveen noted that attractive prices, robust fundamentals, and potential interest rate cuts create multiple favorable conditions. The real estate market is at a turning point, with a continued positive outlook on the "global city" layout, focusing on growth markets with high education levels and diverse populations.
In terms of fixed income, municipal bonds offer considerable yield and income advantages, remaining attractive. Even with ongoing market volatility, municipal bonds still provide a significant level of yield advantage. Nuveen also sees investment value in senior loans, with current yields reaching 6.5% to 8%. There are ample market opportunities, with a large amount of loans (totaling $225 billion) trading below $95, with an average price of about $85, and a three-year yield to maturity of about 16%
