Monthly Forecast Update

We now see more accelerated tightening cycles and higher terminal rates in all of the economies we track.

May finally brought some relief in what has been a consistent Treasury market selloff this year.

Both equity and bond markets continued to sell off in April and early May amid heightened volatility as investors grapple with a new central bank regime ushered in by the highest rates of inflation in the inflation targeting era. Gone is the cautious approach to monetary policy seen over the past decade—central banks are raising […]

The Fed kicked off its tightening cycle in March with a widely expected 25 bp hike.

Equity markets plunged and prices for key commodities produced in the region jumped higher with WTI trading above US$100/bbl for the first time since 2014. – RBC Economics

The hawkish turn from major central banks that began late last year only accelerated in the early stages of 2022. Both the BoC and Fed used their January meetings to flag imminent rate increases and we look for hikes from both in March, slightly earlier than we previously assumed. The Fed sounded particularly hawkish, with […]

Hawkish central banks and concerns about persistent inflation drove a selloff in government bonds with 10-year yields closing in on 2021’s highs.

With the building blocks of a consumer-led recovery remaining in place, we think central banks will be easing off the accelerator next year. – RBC Economics

We think the key question shaping up for 2022 is, can central banks continue to hold rates low until economies fully recover, or will inflation concerns force them to act more conventionally and raise rates in advance?

Central banks are acknowledging inflation will be more persistent than previously expected.

Economic recoveries are seeing some loss of momentum, but central banks are generally sticking to their scripts.

Advanced economies generally continued to regain their footing with July reports showing a strong increase in growth and improving labour market conditions.