Newton’s fixed income head concerned about upcoming elections

Upcoming elections in 2016 (Spain, US) and 2017 (France, Netherlands) are likely to worry markets, Paul Brain, head of Fixed Income at Newton Investment Management said.

Brain showed concerns about the general move away from the centre in politics towards more extreme political ideas.

“This is leading to more uncertainty in markets, and that is affecting investment and economic growth. The more uncertainty there is, the greater the chance we see the emphasis on monetary stimulus,” he explained.

According to Brain, the ECB, the Bank of Japan but also the Fed and the Bank of England will have to be more vigilant in order to ensure that economies do not slip into recession and that monetary policy is “still kept fairly loose”.

“So although there is a chance the Federal Reserve could raise interest rates, the expectations this time are that this will be a very shallow increase in interest rates and that the path of interest rates after July will be a lot lower than it was when the Federal Reserve last raised interest rates back in December 2015,” Newton’s head of Fixed Income concluded.

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