Not immune (2020/1/29)
The economy is in a bottoming phase. And financing conditions remain favourable in spite of the coronavirus outbreak. These are arguments against further rate cuts from the Fed and the ECB.
Clear & concise
- The economic bottoming phase is not yet over even though sentiment has brightened.
- The coronavirus adds the threat of a fresh downside risk.
- Despite the recent correction, financing conditions are looking better than expected.
- The Fed and the ECB will only cut rates further if risks to the economy materialise.
- Despite short-term downside risks, we are continuing to overweight higher-risk assets.