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YELLEN: Rate Increases Cannot be Ruled Out

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Photo Credit: Federal Reserve, March 18, 2015

Photo Credit: Federal Reserve, March 18, 2015

Federal Reserve Chair Janet Yellen calmly stated at a press conference that a rate increase in June cannot be ruled out. Yellen added for the Federal Reserve to raise rates, there must be “further improvement in labor markets,” and inflation will need to go back to its 2% target over the medium term. The Federal Reserve downwardly adjusted their inflation forecast for 2015. Low energy prices and low wage growth are holding back inflation in the United States. Economic and data metrics will be key determinants if the Federal Reserve will change rates in June.

Yellen commented on the Federal Reserve’s monitoring of financial stability – viewing it as moderate for now. She said, “overall measures of the equity markets are on the high side.” Yellen also saw the U.S. corporate debt market having unusually low spreads.

The Word Patient

Notably, the word “patient” was removed from the March Federal Open Market Committee (FOMC) statement after the two-day meeting that ended on March 18th. In December 2014, the FOMC statement read the Federal Reserve “can be patient in beginning to normalize the stance of monetary policy.” Federal Reserve Chair Yellen in her comments emphasized the removal of the word “patient” does not mean the central bank will be impatient on monetary policy. Money managers believe the pace of rate hikes will likely be extremely gradual.

SWFI First Read, September 21, 2018

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U.S. Public Becomes More Aware that Gmail Scans Emails

Alphabet is a major stock holding for sovereign wealth funds and large pensions. Search giant Google is under fire for allowing third-party partners and companies, like Return Path Inc and other advertisers, to share data from Gmail accounts. Many experts and tech observers already knew this, but more people in the public are becoming aware of Google’s practices when it comes to privacy. Google disclosed in a letter to U.S. lawmakers this finding. The Wall Street Journal reported that in some instances, app companies were able to read people’s emails in order to improve their algorithms. In 2017, Google said they would stop scanning all of one’s Gmail messages for the goal of personalized ads.

GPIF Infrastructure Exposure Almost Reached 200 Billion Yen in March 2018

Japan Government Pension Investment Fund’s (GPIF) exposure to infrastructure real estate was 196.8 billion JPY at the end of March 2018. At that period, 57% of the exposure was to the UK, 15% was to Australia, 15% to Sweden, 10% to Spain and 3% to Finland. 21% of GPIF’s infrastructure portfolio was linked to airports versus 27% to ports.

AIMCo-backed sPower Closes $498.7 Million Bond Deal

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Iceland Contemplates a Sovereign Wealth Fund

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The Government of Iceland is looking to possibly form a sovereign wealth fund to stabilize the country from unforeseen shocks to the national economy. The Iceland government released a statement saying, “The state’s contributions to the Fund will be equivalent to new revenues from publicly owned power production companies which are expected to accrue in the coming years.”

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CBRE Global Wins First GPIF Global Real Estate Mandate

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Japan Government Pension Investment Fund (GPIF) awarded its first global real estate mandate by hiring CBRE Global Investment Partners Limited. This is a global core real estate fund-of-funds separate account. Overseeing this mandate as a gatekeeper is Asset Management One Co., Ltd., which is a unit of Mizuho Financial Group. This RFP was launched in April 2017.

CBRE Global Investment Partners is the multi-manager arm of CBRE Global Investors.

In addition, on August 8, 2018, GPIF hired two custodians for short-term investments. These custodians are Trust & Custody Services Bank, Ltd and The Master Trust Bank of Japan, Ltd.

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