• The European Central Bank (ECB) held interest rates steady at its meeting this week while pledging that its monetary policy remains supportive.1 At the same time, the ECB lowered its forecast for Europe’s growth in 2018 and 2019 to just 2% and 1.8%, respectively.1
  • The latest ECB forecast highlights the disparity in recent economic growth between the eurozone and the United States. The U.S. economy grew at 4.2% in the second quarter of this year and has grown 2.9% over the past four quarters.2
  • While the Fed is more than 30 months into its current tightening cycle, the ECB is still engaged in bond purchases to help encourage growth.
  • U.S. government debt is, therefore, relatively attractive compared to the low rates in other major developed economies, including Germany, Japan and the U.K., as the chart shows.3 However, increased demand for U.S. government bonds has acted as a sort of cap on U.S. rates in recent years.
  • Even though the Fed has enacted seven rate hikes since December 2015 and is planning more for this year and next, finding competitive levels of income could remain a challenge as global interest rates remain very low.

1 European Central Bank, https://bit.ly/2Mt1or5.
2 U.S. Bureau of Economic Analysis, https://bit.ly/2NDYSTG.
3 Bloomberg, as of September 13, 2018.


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