- Interest rate cuts are not a certainty
- Changing debt structures present risks for investors
The standard narrative for most of the past quarter is that the inflation shock has already worked its way through the system, enough to bring on multiple rate cuts from the Federal Reserve, European Central Bank (ECB) and Bank of England (BoE) this year.
That expectation, helped along by positive noises from the US Fed, was enough to prompt a rally that saw the S&P 500 rise by 11.7 per cent in the fourth quarter. The Euro Stoxx rose 7 per cent, while the FTSE All-Share was up by a more sedate 3.4 per cent over the same period. The market expectation is for up to six cuts from the Fed and ECB this year, starting as early as March, with four to come from the BoE.