Fed Providing Policy 'Mis-Guidance': Pimco's Mather

The video discusses the current state of inflation expectations and the Federal Reserve's policy decisions. It highlights the market's skepticism about the Fed's ability to meet its inflation targets and suggests that the Fed's forward guidance has been misleading. The discussion covers the concept of a neutral policy rate, market mispricing, and the potential for inflation to overshoot. The video also explores investment strategies, particularly focusing on inflation-linked bonds, and examines the impact of global quantitative easing on the yield curve and portfolio positioning.

What is the main concern regarding inflation expectations in relation to the Fed's interest rate decisions?

• Inflation expectations are too low.

• Inflation expectations are decreasing too rapidly.

• Inflation expectations are above the Fed's target.

• Inflation expectations are irrelevant to the Fed.

What is one suggested action for the Fed to regain market credibility?

• Follow through with their monetary policy reaction function.

• Increase forward guidance.

• Ignore market expectations.

• Reduce interest rates.

What is the 'new neutral' policy rate according to the discussion?

• 1% nominal

• 2% nominal

• 3% nominal

• 4% nominal

Why are inflation-linked Treasurys considered a defensive investment?

• They are not linked to market expectations.

• They have a valuation cushion against inflation overshoot.

• They are not affected by inflation.

• They have a high yield.

What is causing the flattening of the yield curve according to the discussion?

• Domestic economic policies.

• Global quantitative easing and bond purchases.

• Increased interest rates by the Fed.

• Decreased demand for long-term bonds.