Understand emerging markets opportunities and the American Century advantage.
By Rich Taylor & Joyce Huang, CFA - December 2019
U.S. Treasury yields remained volatile in November, soaring early in the month in response to the Fed’s monetary policy pause and retreating in the second half on mounting year-end demand. Volatility is likely here to stay, which we believe highlights the importance of active management in uncovering global opportunities.
Economy. We expect the U.S. economy to continue growing at an annualized rate of 2.0%-2.5%, outpacing growth in other developed markets, including Europe and the U.K. Although growth in China is slowing, overall expansion in emerging markets should remain relatively stable.
Rates. After cutting rates three times in 2019, the Fed remains on hold. Unlike the broad market, which expects two more rate cuts in 2020, we believe policymakers will ease only once. Rates remain much lower—and even negative—in key European markets. This irregularity is driving demand for U.S. bonds and helping to keep U.S. yields low.
Inflation. Inflation generally remains muted and below central bank targets around the world. We don’t expect inflation to move much higher in the near term.
Notes from the Global Fixed Income Desk
Monthly analysis of the global bond market.
The return potential of developing economies is a given. But, the ability to capture it without undue risk is not.
As the credit cycle ages and corporate bond investors grow increasingly defensive, we believe select strategies may continue to deliver value.
Sr. Client Portfolio Manager Joyce Huang explains why an unconstrained, "benchmark-agnostic" approach with a rigorous risk-management effort may offer a better solution than tracking a benchmark index.
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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