Lara Rhame, managing director and chief U.S. economist at FS investments, echoes the optimism of others that 2021 will likely see healthy macroeconomic growth, but she notes the recent worsening of COVID-19 around the country has caused a near-term setback in the country’s economic return.
Macroeconomic policy will continue to support the economy through this setback, acting as a tailwind toward economic recovery; however, this will likely have two major effects: 1) inflation will increase as the economy starts to improve, which may cause volatility in inflation expectations and interest rates, and 2) the dollar’s weakness will continue to deepen.
What does all this mean for investors? Rhame anticipates a likely rise in interest rates will cause fixed income securities as well as equities, which have become increasingly tied
