SEI - Quarterly economic outlook: A higher-for-longer economy

by Art Patten, CFA, Client Portfolio Strategist

Read the full commentary here or watch the 5-minute video breakdown here.

The third-quarter move in interest rates has been a global phenomenon, driven by higher “real” rates (bond yields excluding inflation) and, depending on the model used, additional risk compensation for inflation and real-rate risks. Higher real rates make sense given the historic physical investment boom occurring in the global economy (primarily within AI-related areas but also with regard to military and other infrastructure expenditures) that has been accompanied by persistent government budget deficits. The resulting demands for financial capital have been intense, marking a sharp departure from the so-called global savings glut of the prior two decades.