Pulais: The market overlooks the threat of U.S. inflation, and the employment market seems to be the focus of the Federal Reserve's attention
Arif Husain, Global Head of Fixed Income and Chief Investment Officer at PIMCO, expressed his views on the U.S. economy and the future direction of Federal Reserve policy. He pointed out that although inflation has not been as high as expected, the latest data shows that inflationary pressures are spreading rather than weakening. Even if artificial intelligence may bring deflationary effects in the medium term, this impact has yet to materialize. Additionally, as political pressure poses challenges to the independence of the Federal Reserve, inflation risks are undoubtedly rising. Among the factors influencing interest rates, the market is fully focused on the slowdown in U.S. economic growth and the job market, while overlooking the possibility of an inflation rebound, which is surprising. It is worth noting that U.S. immigration policies have restricted labor supply, but the market consensus has not adequately anticipated the possibility of a decline in the number of new jobs added each month. The job market also seems to be a focal point for the Federal Reserve. Looking ahead, with the next Federal Reserve Chair set to take office in May 2026, the central bank's fundamental influence on long-term Treasury yields will be a factor that cannot be ignored. While the market generally expects the next chair to lower short-term interest rates, the possibility that the Federal Reserve may implement yield curve control measures to suppress long-term yields has not yet garnered sufficient attention from the market
According to the Zhitong Finance APP, Arif Husain, Global Head of Fixed Income and Chief Investment Officer at PIMCO, expressed his views on the U.S. economy and the future policy direction of the Federal Reserve. He pointed out that although inflation has not been as high as expected, the latest data shows that inflationary pressures are spreading rather than weakening. Even if artificial intelligence may bring deflationary effects in the medium term, this impact has yet to materialize. Additionally, as political pressure poses challenges to the independence of the Federal Reserve, inflation risks are undoubtedly rising.
Among the factors influencing interest rates, the market is fully focused on the slowdown in U.S. economic growth and the labor market, while overlooking the possibility of a rebound in inflation, which is surprising. It is worth noting that U.S. immigration policies have restricted labor supply, but the market consensus has not adequately anticipated the possibility of a decline in the number of new jobs added each month. The labor market also seems to have become a focal point for the Federal Reserve.
Looking ahead, with the next Federal Reserve Chair set to take office in May 2026, the central bank's fundamental influence on long-term Treasury yields will be an important factor that cannot be ignored. Although the market generally expects the next chair to lower short-term interest rates, the possibility that the Federal Reserve may implement yield curve control measures to suppress long-term yields has not yet received sufficient attention from the market
