Federated Hermes
The latest research and outlooks in the ProAllocate library
- Macro
The US jobs market got crowded in October
Federated Hermes reports October nonfarm payrolls beat expectations with large upward revisions to August and September data, alongside strong household employment and falling unemployment. The firm says this raises the odds of a quarter-point Fed rate move in December, while noting wage growth is slowing toward the Fed's target.
- Fixed Income
Are markets tolerating the monetary medicine?
The article argues that despite recent Treasury yield volatility, elevated real and nominal US yields justify holding duration at neutral and favour strategic bond allocation. It flags slowing GDP growth, possible Fed hikes, and Iran-related oil risk as key forward drivers.
- Macro
US Midterms 2026: Democrats take control of Congress
Federated Hermes strategists Steven Chiavarone, Deborah Cunningham and RJ Gallo argue that divided government after the US midterms should support equities and keep the Fed hiking rates, while AI regulation risk could benefit bonds.
- Macro
The midterms and the market
Citing 90-plus years of data showing Q4 equity gains in most midterm election years, the piece argues the Fed's October pause and priced-in policy support a cautiously bullish outlook. It outlines two scenarios—soft landing versus sticky inflation—with corresponding equity and fixed-income tilts.
- Fixed Income
Does French turmoil signal a buying opportunity?
Widening OAT-bund spreads reflect France's deteriorating fiscal position and political instability rather than a single trigger, creating selective trading opportunities but not broad value, the author argues. Contagion risk to peripheral eurozone markets remains contained for now, though structural caution on France persists.
- Macro
‘Information-rich’ environment
Federated Hermes notes US Q3 GDP grew a stronger-than-expected 3.4%, driven by AI-fuelled corporate capex and consumer spending, while the Fed paused rate hikes despite rising inflation and oil prices. The firm expects two more quarter-point hikes and warns of a temporary correction in large-cap growth and tech stocks.
- Macro
A day early and a hike short
The Federal Reserve held rates steady despite GDP growth hitting 3.4% and inflation rising above target, prompting criticism that officials should have hiked given their own bullish rhetoric. Separately, the piece notes how increased Treasury bill issuance can push up yields on cash and liquidity products.
- Fixed Income
Are higher yields a warning sign or signal of better opportunity ahead?
PGIM's Karen Manna argues that higher US Treasury yields, driven by reduced price-insensitive buying and Fed policy uncertainty, reflect both economic resilience and rising term premia. She contends elevated starting yields now offer fixed-income investors stronger income potential and improved diversification relative to richly valued equities.
- Emerging Markets
Shock Brazil election result unnerves markets
Federated Hermes examines Lula's narrow re-election win over Flávio Bolsonaro, noting Brazil's high debt, tight monetary policy and fiscal uncertainty triggered a sharp sell-off in the real, bonds and equities. It warns growth will stay constrained unless fiscal clarity emerges, favouring exporters and financials over leveraged domestic firms.