Fed is clearly entering unchartered territory – Deutsche Bank

By FXStreet FXStreet (Delhi) – Stefan Kreuzkamp, CIO at Deutsche Asset & Wealth Management, comments on the Fed’s rate increase.

Key Quotes

“The rate hike, together with dovish statements from the FOMC has been the basis of our 2016 market outlook. There is therefore nothing we have to change for our strategic calls: We remain constructive on developed market equities with a slight preference for Europe and Japan over the US. Our year-end targets are 2170 for the S&P 500, 11700 for the DAX, 3600 for the EuroStoxx 50 and 1030 for the MSCI Japan. Sector wise, technology, consumer cyclicals and financials remain in focus. The latter sector has historically outperformed as central bank interest rates start rising.”

“We acknowledge the market risks associated with the Fed hike, for example fund flows out of higher risk asset classes such as US or emerging market high yield bonds. In light of the fundamental strength of most DM companies we would, however, view pronounced equity market weaknesses in the aftermath of the Fed hike as a tactical buying opportunity.”

“With the first step being behind us, markets can now focus on the year 2016. We expect two further rate hikes, but Fed watching will become much more …read more

Source:: FX Street