Manulife Investment: Expects the Federal Reserve to enter a loose monetary policy cycle later this year
Manulife Investment Management stated that it is expected that the Federal Reserve will enter a global easing monetary policy cycle later this year. Despite uncertainties such as credit tightening and economic slowdown, investors need to remain flexible in adjusting their strategies to adapt to the uncertain economic environment. Manulife Investment Management has observed attractive investment opportunities in developed markets and emerging markets outside the United States, especially in Japan and India. In addition, investors should also focus on the energy and commodities sectors. The pace of global inflation slowdown will be a key focus for the remainder of this year, which may allow the Federal Reserve to cut interest rates by the end of the year
According to the Zhītōng Financial APP, Manulife Investment Management stated at the 2024 mid-year investment outlook media briefing that there is a great chance that US interest rates have peaked, and it is expected that the Federal Reserve will enter a global easing monetary policy cycle later this year. Manulife Investment Management predicts that inflation will align with the Federal Reserve's target level, and the employment situation is not expected to exert upward pressure on service sector inflation. Despite these favorable trends, the expectation is for the US economy to slow down due to credit tightening for businesses and consumers. In this delicate outlook, investors must remain flexible in adjusting their strategies to cope with the uncertain economic environment.
Luke Browne, Head of Asset Allocation for Manulife Investment Management Asia, stated, "We are currently in the middle of the year, and we believe the global economy is still in good shape. Despite recent economic slowdown, the US economy remains in a leading position driven by strong consumer activity. Additionally, economies such as Europe and Japan are showing signs of stability and improvement. Policymakers are taking intervention actions to address challenges faced by industries."
Luke Browne mentioned, "The pace of global inflation slowdown, especially the deflationary trend in the US, will be a key focus for us in the remaining time of this year. Central banks of developed countries like Switzerland and Canada, as well as the European Central Bank, have all cut interest rates in the past few months. However, due to persistent inflation factors such as car insurance and housing costs, uneven progress in deflation has led the Federal Reserve to maintain a cautious stance."
Looking ahead, Luke Browne believes that these one-time inflation factors will stabilize, allowing the Federal Reserve to cut interest rates before the end of this year. This is crucial because cutting interest rates in an environment of stable economic growth can make market or asset valuations relatively more attractive. For example, US small-cap stocks have high leverage in the interest rate cycle, and their relative valuations have discounted to historically low levels over the past few decades. Therefore, they are expected to benefit from the rate reduction cycle. Additionally, attractive investment opportunities have emerged in developed markets and emerging markets outside the US, especially in Japan and India. In terms of industries, investors should also focus on energy and commodities. Manulife Investment Management observes that investment opportunities are emerging in the ASEAN market, presenting more opportunities to seize during the easing cycle