October 2024 | A recent report in Europe shows the region's productivity and investment gap with the United States is widening, and a similar trend is emerging in connection to China. The risk of Europe becoming irrelevant is escalating, particularly in light of advancements in the digital economy and artificial intelligence (AI). In the US, the Fed gave strong forward guidance on rates, which is in contrast to its recent approach of staying data dependent on inflation. This, coupled with some concerns on growth, led us to lower our terminal rate expectations. Its 50bp cut underscores the Fed's willingness to pivot after the recent labor market softening and diminishing upside risks to inflation. We expect further 50bp cuts by year-end.
01 | A combination of low investment and low productivity has undermined Europe's competitiveness. Companies are hesitant to invest due to weak expected growth, creating a vicious cycle that is stifling further economic progress.
02 | The Fed shifted its focus from inflation to growth in an attempt to avoid a significant deterioration in employment. The US economy seems poised for a soft landing, with deceleration being driven by consumption and an easing labor market.
03 | The Bank of England started cutting rates in August and - after keeping them on hold in September - is expected to keep reducing policy tightness with two further cuts before the year-end.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of October 9,2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
