If inflation behaves, interest rates in the US could settle closer to 3% over time, according to Marc Franklin, Deputy Head of Multi-Asset Solutions at Manulife Investment. He said financial markets are already pricing in around five rate cuts spread over this year and the next.“That takes the terminal rate down to the high twos, around 3%. It’s not an unreasonable expectation if core PCE (Personal Consumption Expenditure) inflation stabilises around 2–2.5%,” Franklin said. At that point, the real yield would be roughly 1%, which he described as “somewhat of a neutral policy setting”.
Investors, he pointed out, are moving ahead of the US Federal Reserve’s own projections. Market pricing now reflects the belief that inflation risks, such as potential tariff shocks, may not be as persistent or damaging as some Fed officials, including Chair Jerome Powell, have warned.
Franklin and his team are building their equity portfolio by focusing on markets that offer a good balance between risk and reward. They are favouring regions with attractive valuations and steady dividends. The UK and Australia, for instance, offer favourable dividend yields and reasonable valuations.Read Here | HSBC’s Williem Sels sees no US recession risk, stays positive on India, China, SingaporeFranklin is also investing in long-term global themes that will benefit from ongoing changes in geopolitics and global economic trends. Some of these themes include defence technology, cybersecurity, industrial innovation, and the shift of supply chains back to the US
Investors, he pointed out, are moving ahead of the US Federal Reserve’s own projections. Market pricing now reflects the belief that inflation risks, such as potential tariff shocks, may not be as persistent or damaging as some Fed officials, including Chair Jerome Powell, have warned.
Franklin and his team are building their equity portfolio by focusing on markets that offer a good balance between risk and reward. They are favouring regions with attractive valuations and steady dividends. The UK and Australia, for instance, offer favourable dividend yields and reasonable valuations.Read Here | HSBC’s Williem Sels sees no US recession risk, stays positive on India, China, SingaporeFranklin is also investing in long-term global themes that will benefit from ongoing changes in geopolitics and global economic trends. Some of these themes include defence technology, cybersecurity, industrial innovation, and the shift of supply chains back to the US
Currently, the firm’s exposure to Indian equities is neutral relative to benchmarks. They are watching closely to see if credit demand responds positively to rate cuts.
Within Asia, markets like Korea, Hong Kong, and China, which are trading at discounts and now have positive triggers, could draw investor attention. In such cases, investors may shift some funds out of India to invest in these opportunities, depending on how India compares in relative terms.
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