CAPITAL ECONOMICS: CENTRAL BANKS MAY HIKE LESS THAN MARKETS EXPECT

Capital Economics says central banks are unlikely to raise rates as far as investors currently price over the next year.

While elevated bond yields have tightened financial conditions, much of that tightening reflects expectations for higher policy rates and could reverse if central banks don’t deliver.

The firm expects energy prices to fall next year, limiting second-round inflation effects and reducing the need for additional tightening.
(@WalterBloomberg)