Here are some keys take away of global strategy 2Q 2024:

  • Central banks remain cautious, but interest rate cuts are on the horizon.

This wait-and-see approach is expected to cause fluctuations in the bond market throughout the second quarter. Despite this uncertainty, some analysts believe US government bonds offer good value. Corporate bonds with strong ratings are also seen as favorable options.

  • Economic growth is projected to slow down but remain positive.

Private consumption will be a key factor in determining overall economic performance. While inflation rose slightly in the US earlier this year, it's expected to decline again as the economy cools. The eurozone is forecast to experience modest growth, driven by a healthy labor market and wage increases. Inflation in the eurozone is expected to fall to 2.5% this year, with service sector price increases being closely monitored by the European Central Bank.

  • Both the US Federal Reserve and the European Central Bank are waiting for more evidence of sustained inflation reduction before cutting interest rates.

While rate cuts have been hinted at, specifics remain unclear. The recent rise in US Treasury yields is attributed to higher-than-anticipated inflation in the first quarter. However, these yields are expected to decrease in the second quarter due to the projected economic slowdown. German bond yields are likely to follow a similar trend, with limited movement anticipated despite potential rate hikes in the eurozone. Overall, the bond market is expected to remain volatile in the coming months.

Source: https://www.fxstreet.com/