The Fed’s long-awaited rate cut in September marks the start of a new easing cycle. With the end of the higher-for-longer narrative, investor expectations have shifted, prompting portfolio adjustments and risk premia arbitrage.
Private equity, which had previously been hit hard by rapid interest rate increases, saw a drop in deal activity, clogged exit routes, and more challenging fundraising conditions. However, this monetary easing brings welcome relief. On the private credit side, the outlook seems mixed. While lower rates may reduce returns on floating-rate loans, they create refinancing opportunities and increased demand for sponsor-backed financing. Meanwhile, banks are collaborating more with non-bank lenders, creating new credit markets dynamics, and enhancing liquidity.
In the latest UBP Headline, our experts explore how the changing monetary landscape will reshape valuations and capital flows in private markets, and assess its impact on private credit, real estate, and infrastructure.
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