The prospect that US or euro-zone policymakers might overdo tightening is now one of the most prominent threats to the global economy, according to Allianz Chief Economist Ludovic Subran.

Speaking to Bloomberg Television, he said his outlook for a so-called “soft landing” hinges on policymakers not going overboard in their drive to tame consumer prices.

“It depends vividly on central banks’ determination to kill inflation,” he said. “One of the main risks to the economy is the risk of policy mistakes from central banks, and this toxic policy mix risk between fiscal and monetary tightening at the same time.” (Continue Reading - Bloomberg)

Mackenzie Investments, one of Canada’s largest fund managers, is turning less optimistic about stocks and sees better value in bonds after the 13% rally for global equities in the first half. 

Central bankers’ campaigns to raise borrowing costs are starting to have an impact on the economy and will eventually force investors into a more defensive mode, Lesley Marks, Mackenzie’s chief investment officer of equities, said in an interview. There’s a 60% chance of a US recession in the next 12 months, according to economists in a recent Bloomberg survey. 

“We think that as the data continues to unfold throughout the rest of the year, people will see that the economy is in fact slowing,” crimping corporate earnings, she said. “The relative value exists right now in fixed income.” (Continue Reading - Bloomberg)

The world's major central banks delivered in June the biggest number of monthly interest rate hikes year-to-date, surprising markets and flagging more tightening ahead as policy makers grapple to get the upper hand in their battle against inflation.

Seven of the nine central banks overseeing the 10 most heavily traded currencies that met in June hiked rates, while two opted for no change, Reuters data showed.

Both Norway and the Bank of England surprised markets last month with a larger-than-expected 50 basis points move, while Canada and Australia resumed their rate hiking cycles. Sweden, Switzerland and the European Central Bank also tightened policy, taking the total monthly tally of hikes to 225 basis points last month. May had seen six rate hikes across six meetings. (Continue Reading - Reuters)