Across Europe, ruling parties are under pressure. Bond investors should stay active and invested, in our view.
Investors have seemed transfixed lately by endless news headlines on the path of monetary policy. But fiscal policy outcomes have far-reaching impacts on long-run growth and fundamentals in the world’s economies. On that score, many regions continue to wrestle with the challenges of deficits and debt.
Although markets expect both the Fed and the ECB to cut rates in June, macro developments could change that forecast.
Sovereign debt levels soared during the pandemic, and countries at the eurozone’s periphery may look high risk. But appearances can be deceptive.
As European inflation rates converge with targets, markets expect rate cuts. But central banks are set on a decisive victory over inflation.