Understand emerging markets opportunities and the American Century advantage.
By Rich Taylor & Joyce Huang, CFA - September 2019
Volatility likely will remain elevated as investors focus on slowing global growth, trade uncertainty and central bank policy. We believe this backdrop underscores the importance of active management in uncovering opportunities globally.
Economy. As we expected, GDP growth in the U.S. is moderating to trend levels (2.0%-2.5% annualized), while GDP growth in Europe continues to slow. In Japan, GDP growth remains vulnerable to external and internal shocks. Growth and growth outlooks in emerging markets remain relatively stable overall.
Rates. In our view, two more Fed rate cuts, or a total 50 bps of easing, over the next 12 to 18 months, should be sufficient to lift inflation expectations, steepen the yield curve and support continued U.S. growth. European rates are unusually low (negative in some markets), and likely headed lower, which is increasing demand for Treasuries and putting additional downward pressure on U.S. rates.
Inflation. Inflation generally remains low and below central bank targets around the world. Despite the effects of tariffs, we believe U.S. inflation is more likely to decline than increase, largely due to a slowdown in home price appreciation.
Notes from the Global Fixed Income Desk
Monthly analysis of the global bond market.
As the global economic cycle matures, certain risks inherent in fixed-income investing will become more apparent.
Abdelak Adjriou, discusses his view on the current investment environment and the benefits of allocating into emerging market debt.
After a reprieve in July, volatility has returned to emerging markets assets, thanks mostly to tumult in Turkey.
August 14, 2018
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
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