Investors see U.S. rates staying as high as 4 per cent in long term
Fear that interest rates in major economies will stay relatively high is creeping back and threatens a painful wake-up call for financial markets, big investors warn.
Global stocks will suffer “a valuation drag from higher for longer rates,” said Ann Katrin-Petersen, senior investment strategist at the BlackRock Investment Institute, the research arm of the world’s largest asset manager. BlackRock’s Petersen forecasts U.S. rates of close to 4% for the next five years and about 2% for the euro zone. “We have entered a new macro market regime and one of the cornerstones of that regime is structurally higher rates,” she said.
With U.S. rates expected to settle around 3.5% and a wave of corporate refinancing coming in 2026, she added, “investors will be disappointed.”Ageing populations, a shrinking workforce and Western economies re-shoring production from China are expected to keep inflation and rates elevated.
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