Hendry: Markets are pricing in hawkish rate hikes

MARKETS WILL PUSH RATES UP

Hugh Hendry, manager of the Eclectica fund, explains why central banks' inaction on interest rates has led markets to take matters into their own hands.

The market has become emphatic. We are in the midst of an orthodox, read strong, economic recovery and monetary policy is deemed too loose. Not willing to wait for official rate hikes, the money markets have taken matters into their own hands: a hawkish series of rate increases has been priced into forward curves. We are now very close to the rate pricing environment of 2004/07 when the global economy enjoyed almost unprecedented strong synchronized growth. The message from the fixed income desk is clear: we are preparing for a global boom. We, of course, dissent. I will reiterate ...