RBC BlueBay Sees Risk of Trump, Harris Policies Fueling Fed Hike
- US presidential policy platforms may spur inflation next year
- Firm is betting on wider breakevens, steeper US Treasury curve
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There is a risk the Federal Reserve has to raise interest rates next year given the inflationary policy platforms of both US presidential candidates, according to Mark Dowding, the chief investment officer at RBC BlueBay Asset Management.
Dowding is betting on that by positioning for US breakeven rates — a proxy of inflation expectations — to widen further. He also expects the US Treasury curve to steepen sharply as longer-maturity yields rise faster than shorter-term ones. That’s because he sees investors demanding higher premiums to compensate for the inflationary outlook, particularly if Donald Trump wins the election next month.