Interest rates under close scrutiny
Hopes for a rapid return to lower interest rates have not materialised so far this year. Higher energy prices and a renewed increase in inflation have prompted central banks to adopt a more cautious stance.
Attention is focused particularly on the United States. Kevin Warsh has assumed the role of Chairman of the Federal Reserve. Inflation remains above target while economic growth continues to prove resilient, creating an increasingly uneven monetary policy picture. While Europe and Japan have raised interest rates, the United States, the United Kingdom and Switzerland remain in a wait-and-see mode for the time being.
Long-term interest rates also continue to attract attention. Despite largely unchanged policy rates, yields on long-dated government bonds remain elevated. Investors increasingly demand higher risk premia to compensate for committing capital over longer time horizons.
At the long end of the curve, investors are no longer pricing only central bank policy, but also inflation risk, fiscal concerns and the compensation required for longer capital commitments.
For investors, this creates a differentiated environment. Short and medium maturities remain attractive. Overall, there are good reasons to expect interest rate markets to remain relatively stable for now, albeit at higher levels than markets anticipated at the start of the year.
