Have We Returned to a Goldilocks Economy?

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

  • Markets are eager to price in a Goldilocks period, but given major central banks are limited in terms of the stimulus they can inject from here, the ability to navigate the narrow course where growth and inflation are just right will be extremely difficult.
  • Absent a policy mistake by the Fed, the odds of recession in 2019 appear low; however, it will be prudent to keep an eye on whether growing debt, deteriorating margins and the global slowdown tip the balance in 2020.
  • While rates are low, fixed income still offers diversification benefits to a portfolio, particularly as the cycle progresses. In terms of corporate credit, in these late stages, it will be critical to emphasize companies exhibiting prudent balance sheet management.

Global Fixed Income Compass

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