European bonds outperform performance this year because the United States will follow the threatened commercial tariffs, forcing the central bank to reduce interest rates, according to the strategies of Street Global Advisors.
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(Bloomberg) – European bonds are prepared for performance this year because the United States will follow the threatened commercial tariffs, forcing the central bank to reduce interest rates, according to the strategies of the Street Global Advisors.
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The company’s strategy says that the American fees on the European Union will affect the economy directed to export in the region at a time when it is already witnessing slow growth and low inflation. This will lead to the leadership of the European Central Bank to reduce rates from 2.75 % to 1.5 %, and they add, beyond the plant rate by 1.9 % at the market price.
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The re -increasing towards more discounts in the European Central Bank will offer a gathering in European bonds for US Treasury bonds, as the Federal Reserve is expected to provide only fourth or two cuts this year amid sticky inflation. The euro that is drowned by equal with the dollar will be sent, according to SSGA.
“This may be the general general of European government bonds,” said Altaf Massam, head of the investment and research strategy in Europe, the Middle East and Africa. “There will be a more stable set of price cuts in Europe compared to the United States.”
The eurozone bonds rose earlier this week after President Donald Trump said that the drawings targeting the region “will definitely happen”, noting a major trade deficit with the bloc. The moves were quickly reversed after delaying the customs tariff imposed on Canada and Mexico for a month, which reduced anxiety about a full global trade war.
But this optimism is not replaced, according to Eleiot Hintov, head of macro policy research at $ 4.7 trillion, asset manager. Trump is believed to use customs tariffs as a negotiating tool in the case of Canada and Mexico – but it means follow -up in the case of the European Union for economic reasons.
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Hintov said that the deeper interest rate cuts will push the euro back through parity in dollars. The husband was trading about $ 1.04 on Friday, up from the lowest level of more than two years at $ 1.0141 on Monday.
Last year, the chief investment officials of SSGA Lori Heinil properly predicted that the Federal Reserve will start the mitigation course by reducing the half -jumped point before the American elections. However, its expectation of 150 basis points of discounts by the end of 2024 proved very aggressive, with 100 basis points during this period.
The markets believe that the Federal Reserve provides the next interest rate in July, with a second step as a 65 % probability in December. A market -based scale is traded for long inflation in the United States above 2.50 %, and 50 basis points higher than the equivalent eurozer scale.
“Unfortunately, this dragon is inflation, which we thought was killed.” “At least in the short term, you seem to have a better chance of the time outside the United States.”
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