Allianz Investment: Expects the Federal Reserve to cut interest rates by 25 basis points this week, leaning towards holding anti-inflation bonds
Michael Krautzberger, Chief Investment Officer of Global Fixed Income at Allianz Investment, expects the Federal Reserve to cut interest rates by 25 basis points at the policy meeting on December 18, setting the target range for the federal funds rate at 4.25-4.5%. From a strategic perspective, Allianz Investment tends to technically trade duration, currently preferring to hold short-term U.S. bonds relative to the European bond market. The firm is also optimistic about the strategy of a steepening U.S. yield curve, as supply will remain high. Additionally, considering the potential inflation risks in the U.S. in 2025, Allianz Investment also prefers to hold inflation-protected bonds. However, since the last Federal Reserve meeting in November, U.S. economic data has remained relatively optimistic, and the results of the U.S. elections indicate that the policy stance in 2025 will be favorable for economic growth. The firm stated that market pricing has shifted to reflect expectations of a future Federal Reserve policy that does not lean towards "dovish," with current expectations that the federal funds rate will be just below 4% by June 2025. Given the current U.S. economic environment, the firm believes that the current pricing seems reasonable. Looking ahead to early 2025, Allianz Investment believes that the Federal Reserve may more cautiously adjust its policy to neutral and may pause interest rate cuts in January while assessing new data
According to the Zhitong Finance APP, Michael Krautzberger, Chief Investment Officer of Global Fixed Income at Allianz Investment, expects the Federal Reserve to cut interest rates by 25 basis points at the policy meeting on December 18, setting the target range for the federal funds rate at 4.25-4.5%. From a strategic perspective, Allianz Investment tends to technically buy and sell duration, currently preferring to hold short-term U.S. bonds compared to the European bond market. They are also optimistic about the strategy of a steepening U.S. curve, as supply will remain high. Additionally, considering the potential inflation risks in the U.S. in 2025, Allianz Investment also prefers to hold inflation-protected bonds.
However, since the last Federal Reserve meeting in November, U.S. economic data has remained relatively optimistic, and the results of the U.S. elections indicate that the policy stance in 2025 will be favorable for economic growth. The firm stated that market pricing has shifted to reflect expectations of the Federal Reserve's future policy not leaning towards a "dovish" stance, with current expectations that the federal funds rate will be just below 4% by June 2025. Given the current U.S. economic environment, the firm believes that the current pricing seems reasonable. Looking ahead to early 2025, Allianz Investment believes that the Federal Reserve may more cautiously adjust its policy to neutral and may pause interest rate cuts in January while assessing new data