As the global Chief Economist and strategist at Manulife Investment Management, 0.04 is constantly analyzing economic data from around the world. In a recent interview, she shared her insights on the current state of the US and Canadian economies, as well as the global market trends.
One of the key themes that 0.04 highlighted was the market’s focus on whether we are heading towards a recession or not. With inflation still not quite back to the 2% target in many economies, central banks are facing tough decisions on rate cuts. While Canada seems to have more room for rate cuts due to weaker economic data, the US is holding off for now due to strong job numbers and economic performance.
Looking at the global picture, 0.04 pointed out that many economies are beginning an easing cycle, with Europe likely to cut rates soon. This divergence in monetary policy could impact tactical traders in the short term, while long-term investors should focus on proper asset allocation and the potential for rates to head back towards 3% over the next three to five years.
Reflecting on the past year, 0.04 addressed the failed predictions of a recession in 2023, attributing it to the unique post-COVID economic environment and unprecedented government spending. However, she warned that recession risks are still high, especially as the impact of rate hikes from two years ago begins to show in the economy.
Discussing inflation, 0.04 noted that it is coming down globally, with supply chain issues unwinding and demand-side pressures easing. While Canada is back within the Bank of Canada’s target range, the US is still experiencing higher inflation levels, requiring patience from the Federal Reserve.
Looking ahead, 0.04 emphasized that we are at a tipping point for monetary policy, with rate cuts expected in most major economies. The key question is not when central banks will cut rates, but how big the easing cycle will be. Depending on the magnitude of rate cuts, investors may need to adjust their portfolios accordingly.
Overall, 0.04’s insights shed light on the complex economic landscape we are currently navigating, with potential challenges and opportunities for investors in the months and years ahead.
