Interest rate cut delays and the upcoming US election could subject markets to volatility as they enter the second half of the year, some asset managers have warned.
Although all the recent inflation data and commentary from the Fed appear to be pointing towards rate cuts this year, it may be difficult for the Fed to cut next year as well.
This is according to Ken Orchard, head of international fixed income at $1.54trn asset manager T Rowe Price.
“Our viewpoint differs from the consensus in that we believe inflation will not decrease sufficiently to enable central banks to cut rates next year,” he said. “The Fed may only be able to cut one to two times this year.”
“Inflation tends to be relatively persistent and there is a possibility that we might even witness higher rates and yields in the future.”
He emphasised that investors need to differentiate what is priced in the rates market versus what will…
