Look Beyond 60/40
“Are we really at peak inflation and peak hawkishness from the Fed?” wrote Saira Malik, chief investment officer at Nuveen. “While market odds of a third consecutive 75 basis points rate hike at the Fed’s September meeting fell dramatically after today’s CPI print, we doubt the Fed will be deterred from continuing its already-aggressive tightening path based on a single CPI report.”
US large caps, with a bias toward high-quality growth companies, are among Malik’s favored stocks as well as select energy names and firms increasing their dividends. Investors should look beyond the traditional 60/40 equity-fixed income portfolio, using real assets such as farmland as inflation hedges via predictable cash flows and built-in CPI escalators, she said.
Aussie Under Pressure
The Australian dollar rose overnight post-CPI data release, but it “will likely remain a hostage to the broad USD trends and changes in the world economic outlook,” Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. “Given rising global interest rates and high inflation, market participants are likely to further downgrade the global growth outlook which is a negative for the pro