Higher for longer

The hotter-than-expected inflation data in the US sent a shockwave through the bond markets with the 10 year Treasury above 4.5% this morning, up from 3.9% at the beginning of the year. We maintain our view that central banks have arrived towards the end of their rate hiking cycle. However, as we expected, the speed of rate cuts is slower than most investors had hoped for. Even in Europe, the expectations for rate cuts by the ECB have diminished as money markets are now discounting three quarter-point cuts in 2024, down from more than six at the start of the year. In our portfolios, we maintain short durations and select only high quality issuers. On the equity side, the ‘higher rates for longer’ regime plays into our hands as we carefully assess the quality and valuation of our investments. In case of questions on our in-house funds or our discretionary portfolio management, please do not hesitate to contact us directly.