Global Bond Market Brief

Notes from the Global Fixed Income Desk

By Rich Taylor & Joyce Huang, CFA - January 2020

Our Global Outlook

U.S. Treasury yields generally headed higher in December, responding to signs of improving growth outlooks and U.S.-China trade tension relief. Rates likely will remain range-bound, which we believe highlights the importance of active management in uncovering global opportunities.

Economy. U.S. economic growth may slow early in 2020, due to production cuts in the airline industry. But overall, we expect trend-level growth of 2.0%-2.5% for the U.S. economy in 2020. Although growth outlooks elsewhere are improving, we expect the U.S. economy to remain among the strongest.

Rates. After making three rate cuts in the second half of 2019, the Fed appears unlikely to change rates any time soon. Policymakers have indicated the bar remains high for moving rates in either direction. Rates remain much lower—and even negative—in key European markets. This anomaly is driving demand for U.S. bonds and helping to keep U.S. yields low.

Inflation. Inflation generally remains subdued and unlikely to edge notably higher in most regions. Inflation in the U.S. remains higher than in other developed markets, and we expect headline and core CPI to converge at 2.0% by mid-year.

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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