While central banks remain reluctant to declare victory over inflation just yet, bond markets appear more than happy to do so on their behalf. With most of the policy rate cuts which we forecast over the next couple of years now already discounted, we now see only limited room for further falls in long-term government bond yields. In turn, that suggests to us that the recent rally in “risky” assets will need to find a different source of fuel than falling discount rates to sustain itself in 2024.
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