Early January’s jobs data out of the U.S. showed a smaller-than-expected increase in wage growth and a soft reading on service-sector activity for the month of December. The data came just days after the release of December’s FOMC minutes, which highlighted that the Fed is on track to keep rates high. But just how high will policy interest rates have to go? How is Fidelity’s Global Asset Allocation team responding to the current economic and monetary policy environment within their multi-asset class funds? To offer his insights on all this and more, we’re joined by Ilan Kolet, Institutional Portfolio Manager. Ilan notes that wage growth remains exceptionally robust in Canada and the U.S. – which leads to higher prices for goods and services passed on to the consumer. They also discuss inflation’s effect on the traditional 60/40 portfolio, with Ilan drawing comparisons between 2022 and the 1970s environment. He shares that commodities do well in the presence of elevated inflation. The Fidelity Inflation-Focused Fund was positioned in commodities throughout 2022. On the topic of positioning, we’ll also get an update from Ilan on the Fidelity Managed Portfolios, which includes some defensive positioning currently. Another key takeaway is Ilan noting that 2023 is an important year to closely follow Central Bank communication. More on this and more coming up.

Recorded on January 9, 2023.

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