Global Bond Market Brief

Notes from the Global Fixed Income Desk

By Rich Taylor & Joyce Huang, CFA - September 2019

Our Global Outlook

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.

Rich Taylor
Rich Taylor
Sr. Client Portfolio Manager
Joyce Huang, CFA
Joyce Huang, CFA
Sr. Client Portfolio Manager

Global Bond Market Brief

Notes from the Global Fixed Income Desk

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