Institution: Market Pricing of the Fed and ECB Rate-Hike Paths May Be Too Aggressive

TechFlow reported on November 6 that Indosuez Wealth Management believes the market’s current pricing of the Federal Reserve and European Central Bank rate paths remains clearly more hawkish than the firm’s base case. The firm’s strategist Lucas Merrick and portfolio manager Alexander Bell expect economic growth to remain stable and inflation to gradually return to normal, which will limit the central banks’ room for further monetary policy tightening.

They said: “However, it may take some time to accumulate enough moderate underlying inflation and economic growth data for this scenario to materialize. During this period, bond markets will remain volatile.” Money markets currently expect the Federal Reserve to deliver about 1.5 rate hikes over the next 12 months and the European Central Bank to deliver two rate hikes. (Jin10)

Source: TechFlow