Investment Weekly

Chart of the week – Proactive ECB versus hamstrung Fed

Eurozone core inflation hit its lowest level since January 2022 this week – leaving the ECB in an enviable position of being able to cut rates. Rate cuts and Germany’s improving fiscal position – with a relaxation of its “debt brake” a potential game-changer for structural growth – mean that Bunds could perform well in a downside scenario. We think these “policy puts” can provide a powerful catalyst to unlock value in many European stock markets on a longer-term basis, with duration in core eurozone bonds also an attractive option.