Global Bond Market Brief

Notes from the Global Fixed Income Desk

By Joyce Huang, CFA - June 2020

Our Global Outlook

Risk assets continued to gain ground in May amid slowing coronavirus infection rates and the reopening of many U.S. states and European countries. Additionally, massive amounts of global monetary and fiscal stimulus supported the financial markets. Despite this renewed optimism, we believe risk potential remains elevated, underscoring the importance of active investing.

Economy. Recent GDP data confirmed the severity of the COVID-19-related economic slowdown. In the U.S. and eurozone, annualized GDP contracted 5% and 3.1%, respectively, in the first quarter. However, there were some glimmers of improvement in May. The U.S. unemployment rate dropped to 13.3% from 14.7% in April, and U.S. consumer confidence rose after a steep drop in April.

Rates. The global recession and central bank stimulus likely will keep key lending rates and government bond yields unusually low across developed markets for the foreseeable future.

Inflation. While inflation likely will remain unusually low in the short term, we believe inflationary pressures are building. In our view, massive U.S. debt, a weaker U.S. dollar and onshoring trends will push inflation higher in the intermediate term. 

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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      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.