You are currently viewing Pacific AM: How many more rate hikes will there be?

Pacific AM: How many more rate hikes will there be?

As the latest rate hikes by the ECB yesterday and the Fed in the US the day before were largely “as expected and already priced in”, the attention now turns to two questions, says Shayne Dunlap, a portfolio manager at independent London based investment boutique Pacific Asset Management (PAM): “How many more rate hikes will there be in the future? And what effect does a 500 bps rise in US interest rates within 14 months have on the labour market?”

Dunlap, who is one of three responsible portfolio managers of the Pacific G10 Macro Rates Strategy Fund, believes that much attention will be on the US NFP jobs data today and the Senior Loan Officer Opinion Survey on Bank Lending Practices in the US early next week which will show how much credit availability in the US has tightened.

“Most central banks are already toying around with last few rate hikes”

Dunlap says that most central banks are “already toying around with the last few rate hikes.” For the ECB, there are two more rate hikes expected in the future.

What made the latest decision of the Fed a bit of a surprise was that it was unanimous, says Dunlap’s colleague Dr Richard Marshall, as the market had not expected that. Also, the Fed had to admit that some of the Fed’s regional governors “hadn’t done a good job before” in the latest banking crisis, which unfolded around Silicon Valley Bank.

And while the economic outlook remains uncertain, both in the US and in Europe, “central banks really never expect recessions,” adds Oleg Gustap, the third portfolio manager in the G10 team. “And it hasn’t happened, yet.”

Pacific G10 Macro Rates Strategy by Pacific AM is an interest rate and FX macro strategy. The fund which invests in the most liquid instruments of the ten most developed countries (G10) was launched in March 2019 and has a fund size of USD 176.3 mio. (as of 31/03/2023).

About Pacific Asset Management

Pacific Asset Management is an independent London-based asset manager serving primarily institutional clients. Pacific AM currently offers three active strategies that are not restricted by a benchmark or a predefined “house view”. All strategies, which are also authorised as UCITS funds in Germany and Austria, are owner-run and characterised by three investment features: They have high conviction, are craft-based and outcome orientated. Pacific AM was founded in 2017 and currently manages assets of GBP 3.6 billion (approx. EUR 4.1 billion), as of 31/01/2023.