Macro and Markets Forecast Edition: Central Banks on Hold

Nordea's latest forecast reinforces a 'no cuts' view for both the Fed and ECB due to resilient economic growth and sticky inflation risks. Consequently, they project a continued upward trend for global bond yields, including the US 10-year and German Bunds.

Key Takeaways

• 1.Nordea maintains its forecast of no interest rate cuts from the Federal Reserve, supported by strong economic growth and a tight labor market.
• 2.The ECB is expected to remain on hold for the remainder of 2024 with no rate changes forecast this year, despite falling inflation.
• 3.Global bond yields are projected to continue rising, driven by high public deficits, increased issuance, and shifting dynamics in the Japanese bond market.

Table of Contents

• Calling for no cuts from Fed now with increasing support from Fed
• ECB sounding a bit more optimistic
• Finally positive signs from the German manufacturing sector
• Inflation expectations finally risen also in Japan
• Long yields on the rise globally
• Our new forecasts for German bond yields
• Our new forecasts for EUR swap rates

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