Investment Strategy Insights

I'm eyeing the 5/95 ranges ... seems to me that European rates are loaded in one direction ...

And no growth/employment mandate ... so it may undershoot on inflation ... and if it does the ECB will have to cut rates ... perhaps faster than people think ...

Where interest rates are heading (ft.com)Higher levels of CPI given tight labour markets, supply chain and geopolitical factors coupled with a very large (and potentially growing deficit) make it highly likely ... this is - however - going to mean that a lot of issuers will be faced with

This chart shows how economists have been revising down their estimates CPI - they have consistently over estimated the levels of CPI as the economy has slowed ... although energy prices will likely cause a further spike in CPI as we roll into the year end ... and we continue to believe

To the market ...

As owners take their marks ... so banks and creditors take their losses ...

Unexpected events can have a big influence on CPI and climate and geopolitical risks will mean that charts like this will continue to haunt the minds of those of us with long (ie pre-GFC) memories ...