Manulife Asset Management: The Fed is expected to enter a loose monetary policy cycle later this year.

Manulife Investment Management said in its mid-year investment outlook media briefing that the U.S. interest rate is likely to peak soon and the Fed is expected to enter the global easing cycle later this year. Manulife Investment Management expects inflation to align with the Fed's target level and the employment situation is not expected to put upward pressure on service inflation. Despite these favorable trends, the U.S. economy is expected to slow down due to the credit crunch faced by businesses and consumers. Investors must keep flexible adjustment strategies to cope with the uncertain economic environment in this subtle outlook.

Luke Brown, asset allocation director of Manulife Investment Management Asia, said, "We are in the middle of the year and we think the global economy is still in good shape. Although the economic growth has slowed recently, the U.S. economy is still leading with strong consumption activities. Meanwhile, the economies such as Europe and Japan have shown stable and improving signs. The policy makers are taking actions to address the challenges faced by industries."

Brown said, "The pace of global deflation, especially the U.S. disinflation, will be the focus of our attention in the rest of this year. Central banks such as Switzerland, Canada, and the European Central Bank have all cut rates in the past few months. However, due to the persistent inflationary factors such as auto insurance and housing costs, the disinflation is uneven, so the Fed has been taking a more cautious approach."

Brown said that looking ahead, he believes these one-time inflationary factors will stabilize, allowing the Fed to cut rates by the end of this year. This is crucial because rate cuts in a stable economic growth environment can make the relative valuation of markets or assets more attractive. For example, U.S. small caps have high leverage in the interest rate cycle and their relative valuation has fallen to its lowest level in decades, so they are expected to benefit from the interest rate easing cycle. In addition, there are also attractive investment opportunities in developed markets outside the U.S. and emerging markets, especially Japan and India. From an industry perspective, investors should also pay attention to energy and commodities. Manulife Investment has noticed that investment opportunities are emerging in the ASEAN market and more opportunities will arise as the easing cycle begins.