By
Borsgade
The three Chief Investment Officers at Bridgewater, Bob Prince, Greg Jensen and Karen Karniol-Tambour, take the temperature of the economy globally and for each region.
Here they see two forces in particular that will continue to put upward pressure on interest rates and downward pressure on the economy: “1) the need to sustain a restrictive monetary policy until key economic conditions have settled into their desired levels and 2) an emerging liquidity hole in the bond market.”
Ser vi på UK og Europa specifikt ser de en række vanskeligheder:
The UK and Europe face more difficult and more stagflationary conditions. Inflation is further above target and growth is weak, near zero. In both economies, inflation is far too high, and wages are rising at a rapid clip, supported by tight labor markets and union actions to secure pay increases. Policy makers are trying to thread the needle between keeping policy tight while avoiding a meaningful contraction. The longer that inflation remains higher than desired and the farther from target that it is, the more acute the choices will become and the more likely that a downturn will be necessary. Market pricing in Europe is very different than in the US. The ECB has fallen behind this tightening cycle, offering significantly lower yields. The equity market is already discounting much weaker growth, and the euro is competitive.
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