Recently, Kristina Hooper, chief global market strategist at Invesco, said core inflation in the eurozone fell to 4.5 per cent in September from 5.3 per cent in August, well below expectations, Zhitong Financial APP learned. Us core personal consumption expenditure (PCE) fell significantly in August, at an annualised rate of 2.2 per cent in three months. Consumer inflation expectations for September, finally released by the university of Michigan, showed five-year inflation expectations of 2.8 per cent, the lowest in more than two years.
However, central banks continue to predict that interest rates will remain "high for an extended period of time":
The recent "bitmap" and "Fedspeak" of the federal funds rate have convinced the market that US interest rates will remain high for a longer time.
JohnWilliams, chairman of the New York Fed, said: "We expect that we will need to maintain restrictive monetary policy for some time to fully restore the balance between supply and demand and to bring inflation down to ideal levels."
AndrewBailey, governor of the Bank of England, said: "We will need to keep interest rates high enough for long enough to make sure we get the job done." The perception that interest rates will remain high for a longer period of time pushed the yield on three -, five-and 10-year Treasuries to their highest level since 2007 last week.
Kristina Hooper is concerned about thisRemain skeptical, "restrictive" how limited? How long is "longer"?
He believes that these are ambiguous language, but have been given great importance. Even a few months later, it is hard to foresee. To keep inflation under control, central banks certainly need to keep markets calm so as not to be overly optimistic. However, central banks in developed countries may not keep interest rates high for such a long time, bringing a positive surprise to the market.
Kristina Hooper pointed out that at presentIt is waiting for more data to support the anti-inflation process in developed countries, especially as the bank is looking for more signs of a slowdown in the US economy. But waiting does not mean doing nothing, despite the recent opportunities for volatility in the market. The focus is on deploying adequate exposure to stocks, fixed income and alternative investments around the world.
Kristina HooperIt is believed that the biggest mistake investors made during the global financial crisis was to lock in losses and wait for them to die. It is difficult to predict market timing at the moment, but he believes a prudent approach is to build a broad and diversified core strategic allocation, while setting aside some space for tactical allocation of the portfolio.