Nate Shetty: Hi, I'm Nate Shetty, the CIO of SEI. This is "Vantage in 60:" The Fed meets this week with markets pricing a one in three chance of a hike. Some suggest that inflation fears reignited by the tensions in the Middle East drove short rates higher. Bond math actually disagrees. Market implied inflation expectations haven't budged. The shift in yields has come from higher real rates. We think this reflects a strong real economy. So hike or pause? The tougher question is a reaction function. A hike could read as confidence or a mistake. A pause could read as relief or worry. Either has its risks. What we are confident about is the level. Global rates are likely to stay elevated across the curve, with the balance of risk pointing even higher. So we're not trading the meeting. We're positioning for the level. That's your "Vantage in 60"
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