Global Head of Fixed Income Jim Cielinski discusses which themes matter most as markets try to determine where we are in the economic and credit cycle and whether central banks will hold the line on being data-driven.

Key Takeaways

  • While structural deflationary trends should ultimately win out, strengthening demand and substantial fiscal stimulus have created a risk that inflation remains stickier for longer. Still, past mistakes are likely to keep the U.S. Federal Reserve (Fed) from overreacting to near-term strength.
  • By replacing lost income, policymakers held the traditional downturn at bay for much of the economy, rushing us past the classic repair phase. While signs of overexuberance already exist in markets, there should be more good news to come.
  • The noteworthy shift in the fiscal and monetary policy toolkit – to explicitly protect heavily indebted companies – has far-reaching implications for the pricing of assets and how we manage money.

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