Institutions: The market's pricing of the Federal Reserve and European Central Bank's interest rate hike paths may be overly aggressive.

November 6, Indosuez Wealth Management believes that current market pricing for the Federal Reserve and European Central Bank interest rate paths remains significantly more hawkish than the firm's base case scenario. The firm's strategist Lucas Merrick and portfolio manager Alexander Bell project that economic growth will remain steady while inflation gradually returns to normal, which will limit the central banks' room for further monetary policy tightening.

The two stated, "However, it may take some time to accumulate sufficient data on mild core inflation and economic growth to realize this scenario. In the interim, bond markets will remain volatile." Money markets currently expect approximately 1.5 rate hikes from the Fed over the next 12 months, and two from the ECB. (Jin10)