Central Banks Inflation and the Case for Quality Bonds

UBS expects the ECB to hike rates in June while other central banks pause, creating a favorable window for investors to buy high-quality, short-to-medium duration bonds.

Key Takeaways

• 1.The ECB is likely to hike interest rates by 25 basis points in June and potentially July, while other major central banks (Fed, BoE, SNB) are expected to hold steady.
• 2.Evidence for second-round inflation effects remains limited despite rising energy and transport costs, and labor markets are beginning to soften.
• 3.Investors should favor quality bonds with short to medium duration to lock in yields and position for potential capital gains if central banks pivot.

Table of Contents

• Central banks, inflation, and the case for quality bonds
• Investment strategy insights
• Global asset class preferences definitions
• Appendix
• Risk Information

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