RBC Capital Markets forecasts – Central Bank rates



Interest rates cuts Markets are pricing in close to seven rate cuts, potentially beginning in March. Our view is that rates have peaked, though the uncertain timing of cuts will mean volatility in bond markets.

The Economic Outlook Economic indicators continue to give conflicting signals, and we continue to monitor the lagging effect of aggressive rates hikes. We think this likely results in a US recession, given high interest rates and restrictive bank lending. At minimum, we anticipate that these effects may suppress growth in the year ahead. To mitigate this uncertainty, we are predisposed towards owning resilient businesses with reliable cash flow generation – that as a result are less exposed to cyclical headwinds.

Bonds – still a good time to buy? The average yield on the Bloomberg Global Aggregate Bond Index has decreased from 4.4% at the beginning of 2024 to 3.6%. For investors seeking to lock-in reduced volatility and predictable cash-flow, we continue to view these yields as an attractive entry point, considering historical average yields.

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