Normalisation of interest rates

First let me wish you in the name of the whole Team at ECP a happy New Year with a lot of success in all your endeavours and a good health. In the first 2024 editions of our daily column, we use the opportunity to provide the main highlights of our current house view. The first investment theme is the normalisation of interest rates. Since the financial crisis and up to 2021, central banks have been keeping interest rates close to zero in order to kickstart economic activity. The substantial rate hikes seen since mid-2022 are to be seen as a “return to normal” as, for example, long term interest rates in the US have been in a range of 3% to 6% over the last 150 years. The current interest rates with a US 10 year Treasury at 4.04% are neither surprising nor abnormally high by any historical standard.