interest rates

As investors grapple with the potential market impact of the upcoming U.S. presidential election and simmering geopolitical tensions, Greg Peters, co-chief investment officer of PGIM Fixed Income, is closely monitoring a unique set of derivatives to gauge the Federal Reserve’s future policy path.

The surge in US Treasury yields above the 4 percent threshold is drawing a mixed response from investors, despite the Federal Reserve’s recent rate cuts. Experts from Pictet, UBS Wealth Management, and Bank of America see an opportunity to lock in attractive yields amid market turbulence, but the bond market remains unconvinced about the Fed’s path forward.

European investors are eyeing the rapid price shifts in the US bond market, driven by expectations of interest rate cuts. While the rise in US government bond prices has been enticing, seasoned investors are now questioning how long this rally can last.

Market expectations of central bank interest rate cuts in 2024 are reasonable, according to Gilles Moëc, the Axa group chief economist and Axa IM head of research, who presented Axa’s outlook for next year in Luxembourg this week. He painted a relatively rosy picture for the US and, to a lesser extent, stagnating Europe, pointing to evidence that inflation is finally under control and that political troubles are not yet certain.

The BCEE, one of Luxembourg’s main domestic banks and commonly known as the Spuerkees, credited rising interest rates as playing a key role in increasing its increased banking income portion of its overall annual report for the year ending in 2022 through over 20% increase to its interest margin. According to a bank press release, this was also due to an increase in lending activities. 

Unlike the Federal Reserve itself, investors believe the “Fed pivot” moment is approaching rapidly. Forward swaps point to a peak in interest rates of up to five per cent. Some market experts however are “uncomfortable” with the view and don’t exclude a level of six percent of the US benchmark.

With Europe and the US entering recession in the last half of this year, Asia, despite a series of severe lockdowns, is facing a brighter future, according to MainFirst portfolio manager Frank Schwarz, in an Investment Officer BE  interview, who adds that his favourite Asian investment theme is semiconductors.

Schwarz manages the newly launched MainFirst - Megatrends Asia fund. This equity fund focuses on Asian investment themes such as digitalisation, consumption, automation and decarbonisation.

US mortgage rates have shot up since the start of this year. The 30-year fixed rate stands at 4.5 percent, the highest level since the start of 2019. Will this bring an end to the housing boom?

The nice thing about the investment profession is that creativity is more important than striving for perfection. Striving for a perfect world runs the risk of chasing the market. By selecting investments in which all the good news is discounted, a portfolio is created that structurally lags behind the market.

It was the week of the central banks. The Bank of England raised interest rates by 15 basis points, the US Fed hinted at three rate hikes and a reduction in the buy-back programme. What exactly the ECB is aiming for is not entirely clear to market analysts. One thing is clear: a rate hike is the ultimum remedium for the central bank of President Christine Lagarde.