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By Filipe Alves da Silva, Investment Specialist at Union Bancaire Privée (UBP)
Given persistent inflation and robust macroeconomic data, the US rate-cutting cycle has been delayed most likely until December. The result should be a yield curve regaining a positive slope as rate cuts should act to push down the short end of the yield curve, while firm growth and inflation of around 2% are set to put upward pressure on longer-dated government bond yields into 2025. This makes the case for focusing on optimising fixed income portfolios for carry rather than capital gains.
We started 2024 expecting slowing inflation, a soft landing, and central bank policy normalisation within the first half of the year having opted to maintain a neutral duration...
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