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Soft landing priced in

Inflation worries seem to be behind us, at least for the foreseeable future. Eurozone #cpi was published this week with a better than expected 2.4% YoY. 15 months ago, inflation was above 10% with an energy crisis accelerated by the #ukraineconflict. Today, expectations are pointing towards #ratecuts on both sides of the Atlantic, and worries of a slowdown and unemployment are gaining traction. It is possible that equity market indices are already pricing in those cuts, but it’s interesting that they don’t seem to price the reason behind those cuts. If G5 economies enter into a recession, and central banks need to act, the market should correct until the economies reach equilibrium again. However, the soft landing scenario, with perfect timing by central banks, seems to be on the books, which is unprecedented.

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