Interest rates: higher for longer?
For professional investors only
In the latest edition of the Weekly Market Compass, Kristina Hooper explores what appears to have become a prominent trend in developed economies: disinflation.
At the same time, many of their central banks are maintaining their "higher for longer" stance on interest rates, which is significantly influencing the bond market. Hooper questions the definitions of terms like "restrictive" and "longer" in the context of monetary policy, highlighting their importance in a climate marked by economic uncertainty.
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Policy-related uncertainty takes centre stage, particularly in the US, where looming threats of government shutdowns and labour strikes have dampened investor sentiment. Hooper states that their psychological impact may outweigh their tangible consequences though.
In China, despite the challenges posed by the property sector, the Evergrande debt crisis and other headwinds, the economy emerges as a bastion of resilience. It’s consistently positive manufacturing PMI figures underscore this.
With so much economic uncertainty, one thing that’s clear is that data will be critically important, and time is needed to develop a clearer picture. As we wait for signs of how signification the global economic slowdown is and how it could impact emerging markets, Kristina Hooper believes that’s it important that investors don’t simply just sit on the sidelines. A strategic, diversified investment approach, with the ability to move tactically when needed will be key.