US Equities: Beneficiaries of Fed Rate-Cutting Cycle

Story of the day:

Fed Chair Powell announced that the time has come to adjust monetary policy amid sharp moderation in US headline inflation, which fell from a peak of 9.1% y/y in June 2022 to 2.9% in August. The Fed’s preferred inflation gauge, the PCE price index, has also touched 2.6% y/y in June. With inflation now on a clear path towards the central bank’s 2% target, Powell expressed confidence in the inflation outlook while highlighting increasing downside risk to employment.

 

What does this mean for your portfolio?

Gain exposure to utilities, consumer staples, and healthcare sectors to ride the tailwinds from falling bond yields. From a “barbell” perspective, the resilient and defensive nature of these sectors complements our structural long-term exposure to technology-related plays.