Real Rates: Negative, but Not Extreme

| Multi Asset

At first glance, the negative real rates that we have witnessed this year may seem extreme, However, our chart shows that they are far from that. The current readings are similar to what we experienced post-2008 and post-2011. The fiscal stimulus from that angle has helped make this “crazy” year more normal than expected.

Central banks around the world have stated their intentions to do “whatever it takes” to help their economies recover from the coronavirus pandemic. Part of that will be to maintain interest rates at their ultralow levels. While we are seeing some signs of inflation (our World inflation Nowcaster is rising at a pace not seen for several quarters), we do not see inflation becoming a risk. So while real rates may stay negative for longer than they did post-2008 and post-2011, we do not expect them to become extreme.


Real Rates: Negative, but Not Extreme
Source: Unigestion, Bloomberg. Data as at 21 December 2020.

Important Information

The information and data presented in this page may discuss general market activity or industry trends but is not intended to be relied upon as a forecast, research or investment advice. It is not a financial promotion and represents no offer, solicitation or recommendation of any kind, to invest in the strategies or in the investment vehicles it refers to. Some of the investment strategies described or alluded to herein may be construed as high risk and not readily realisable investments, which may experience substantial and sudden losses including total loss of investment.

The investment views, economic and market opinions or analysis expressed in this page present Unigestion’s judgement as at the date of publication without regard to the date on which you may access the information. There is no guarantee that these views and opinions expressed will be correct nor do they purport to be a complete description of the securities, markets and developments referred to in it. All information provided here is subject to change without notice. To the extent that this page contains statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties, including, but not limited to, the impact of competitive products, market acceptance risks and other risks.

Data and graphical information herein are for information only and may have been derived from third party sources. Although we believe that the information obtained from public and third party sources to be reliable, we have not independently verified it and we therefore cannot guarantee its accuracy or completeness. As a result, no representation or warranty, expressed or implied, is or will be made by Unigestion in this respect and no responsibility or liability is or will be accepted. Unless otherwise stated, source is Unigestion.

Past performance is not a guide to future performance. All investments contain risks, including total loss for the investor.