Understand emerging markets opportunities and the American Century advantage.
By Rich Taylor & Joyce Huang, CFA - January 2020
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.
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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