The Fed is not on a preset course to raise the funds rate by another 75bp at July’s FOMC meeting, but rather remains data-dependent.
The fragmentation of votes into irreconcilable political blocs with no absolute majority creates a political situation unprecedented under the Fifth Republic.
Last year global sustainable debt issuance hit a record of over $1.4tn, with the overall sustainable debt universe expanding to near $3.4tn. In the first quarter of 2022 this healthy trend halted temporarily, as high energy prices and rising borrowing costs weighed on market trends.
Regime shift: towards a rebalancing from financial capital to physical tangible capital
In the ongoing regime shift, investors have to deal with significant legacies stemming from the previous ‘Volckerian’ regime, namely two forms of inflation: asset price inflation over the course of three decades and, more recently, inflation in the price of goods and services.
Significant investment is required to build resilient economies capable of addressing the current climate and environmental challenges.
The idea that there is a comfortable degree of budgetary room for more active fiscal policy goes hand-in-hand with the assumption that a sustained bond correction (higher safe real interest rate) is not only unjustified based on fundamentals, but is also impossible.
The conversation regarding whether there is room for more aggressive fiscal policy is a hot political topic today. In the US, the debate is likely to become even more inflamed as we approach the midterm elections.
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