Convergence Returns to the Fore

Themes in Focus

Jim Cielinski, Global Head of Fixed Income, provides his perspective on some of the key macroeconomic factors that are driving fixed income markets.

Key Takeaways

  • A softening in trade has been blamed for much of the global slowdown, but there is more behind it; while trade’s near-term impact on growth may be overestimated, investors could be underestimating some of the second-round effects.
  • With the Fed’s pivot to a more accommodative stance, practically the entire developed world is now in easing mode, bringing policy convergence back to the fore.
  • Policy normalization, as we know it, is dead. The ability of central banks to normalize today, at a time when the real equilibrium rate is so low, calls into question the efficacy of traditional monetary policy responses.

Global Fixed Income Compass

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