Macro Minutes
2025 Outlook: Macro, Monetary Policy & Rates
Nov 15, 2024
Blake Gwinn, Head of US Rates Strategy at RBC Capital Markets, and Peter Schaffrik, Head of UK/European Rates & Economics, share insights on the evolving macroeconomic landscape. They discuss the high bond yields amidst central bank rate cuts and forecast how the U.S. economy's resilience will shape global fixed income markets in 2025. Key topics include the challenges in Canada's economy due to political shifts, the stagnant euro area's struggles, and Australia's anticipated consumer recovery fueled by fiscal changes.
35:59
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Quick takeaways
- The resilience of the US economy is expected to influence bond yields and inflation as the Federal Reserve navigates rate cuts.
- Canada's economic struggles are compounded by mortgage resets and its dependency on US performance, necessitating possible rate reductions by mid-2025.
Deep dives
US Economic Resilience and Inflation Dynamics
The US economy is showing signs of resilience heading into 2025, supported by strong consumer and business balance sheets, high corporate profitability, and sustained growth. However, the outlook for inflation points to potential upward pressure due to pent-up demand following the recent election and declines in immigration. This situation complicates the Federal Reserve's response, as they continue to cut rates while managing pressures from a recovering economy. The expectation is that the Fed may pause cuts by March 2025, given the possible rise in inflation risks while maintaining a steady labor market.
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