Feelcapital's CEO, Antonio Banda, predicts that the yield curve will steepen due to the increase in public debt. He recommends short durations in fixed income until rates stabilise.
According to vozpopuli.com, Antonio Banda, CEO and founder of Feelcapital, believes that markets have yet to price in the final interest rate scenario or the decisions of central banks. Banda anticipates that inflation will remain due to oil prices and armed conflicts.
Regarding the Federal Reserve, he expects another rate hike before the year ends and no further increases next year if inflation continues. Concerning the European Central Bank, he asserts that it has halted rate hikes to focus on the long term and will not raise rates again due to the elections in France and concerns over its debt.
On public debt, which remains at historic highs, Banda expects it to increase in the short term and for the yield curve to steepen, with long-term rates much higher than short-term ones. He explains that issuers will have to offer higher yields to place their debt, which implies a direct drop in bond prices.
It is necessary to have higher long-term interest rates for investors to be interested in buying that debt.
In fixed income, Banda currently recommends short durations until the yield curve stabilises, and then to extend them. He believes that retail investors have little room to change duration, while institutional investors can do so through trading futures.
In the stock market, the expert points out that artificial intelligence has dominated the market for years and that large capitalisations will adjust, opening opportunities in other sectors. Among them, he highlights banking, which Banda notes has shown positive development for two years that is starting to be valued.
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