IVOV - Not Your Typical Rate Cutting Cycle
2024-06-03 15:40:00 ET
Summary
- European government bond yields have swung as markets question how far the ECB will ease policy beyond a first cut expected this week.
- Even with anticipated rate cuts, we see policy rates in the U.S. and Europe settling at a far higher level than they were pre-pandemic.
- We favor U.S. stocks over Europe’s on stronger corporate earnings and the AI theme.
Transcript
We think central bank rate-cutting cycles will be far from typical.
1) High for longer
Central banks are set to keep rates above pre-pandemic levels due to persistent inflationary pressures. Mega forces are bolstering those pressures. They are structural shifts like geopolitical fragmentation, demographic divergence and the low-carbon transition that are driving returns now and in the future....
Not Your Typical Rate Cutting Cycle