Could we have another Trichet moment?

Avoiding mis-timed rate hike

It has taken a decade since Lehman Brothers went bust for US real interest rates to return to positive territory, writes Jim Leaviss, head of fixed interest for M&G's mutual fund range.

Following the Federal Reserve's hike last month from 2% to 2.25%, the rate is now just above the central bank's preferred inflation gauge, the Personal Consumption Expenditure index, currently at 2.1%. This will have consequences as positive real rates attract more investors, perhaps at the expense of traditionally higher risk asset classes, such as emerging markets and high yield. Ten years on: The legacy of Lehmans We may see the same narrative repeat throughout the world as growth has finally picked up and as exhausted central banks hand the economic stability baton to politicia...