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The evolution of the fixed income market also remains at the center of the stock market. Until now, central banks have chosen to wait to act because interest rates are rising for the right reason. This can lead to continued larger price movements in the future, ”writes Maria Landeborn, senior strategist at Danske Bank.
So far, the U.S. Federal Reserve hasn’t felt compelled to act on higher long-term interest rates, but the message has been that the central bank is closely monitoring market developments, according to the letter. weekly.
“Furthermore, the Fed assesses that the rise in inflation expectations is temporary and not a permanent increase. If true, there is no reason to tighten, but monetary policy may remain expansionary for a long time,” writes Maria Landeborn in the weekly letter.
At the same time, Danske Bank hopes the Fed is ready to act if the rise in interest rates becomes so strong that it risks threatening the recovery through, among other things, higher financing costs for companies and rising mortgage rates.
In light of the fact that the discussion of higher inflation and a possible tightening of monetary policy may mean more turmoil in the stock market in the future, Danske Bank has a 5 percent preponderance of stocks compared to bonds. , apparently.
