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Are central banks already taking a victory lap?

Franklin Templeton Fixed Income team believes growth projections for the United States will continue to improve as a “soft landing” becomes the most likely outcome, while other economies may face harsher conditions. 
Deeper Thought

Sonal Desai, Chief Investment Officer, Franklin Templeton Fixed Income notes “Our growth projections for the United States continue to improve as a “soft landing” becomes the most likely outcome, while other economies may face harsher conditions. US and European central banks appear to have reached the peaks of their hiking cycles, but we believe it is still too soon to declare victory against inflation. A core tenet of our macro view is central banks will need to maintain rates at higher levels than the market anticipates, which will keep pressure on yields across the curves.

“We are still cautious about taking broad-based risks as spreads are currently not pricing in any potential downside; however, all-in yields remain at historically high levels, making them appear attractive to us. We are finding pockets of value across several sectors and are focusing on security selection.

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