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Pimco and Fidelity believe that the economic outlook for Europe is weak, and the European Central Bank's rate cut may exceed market expectations.
Investors such as Pimco and Fidelity International believe that the economic outlook for Europe is bleak, which could force decision-makers to lower interest rates more than the market expects. The latest market pricing indicates that the European Central Bank is expected to reduce the key interest rate to 1.75% next year. The bank has cut rates for the third consecutive time on Thursday, to 3%. However, Fidelity stated that borrowing costs could drop further to 1.5%, and Pimco also believes there is a risk of a larger rate cut. Further re-pricing could intensify the rise of European Bonds, and European Bonds have already outperformed the bond markets of the USA and the United Kingdom in 2024. A Bloomberg Index tracking euro-denominated government bond returns this year.