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The macroeconomic backdrop is becoming increasingly favorable for G10 bond markets after a difficult start to the year. Hot US inflation prints in the first quarter raised doubts about the Federal Reserve’s (Fed’s) ability to cut rates in 2024. However, more recent data show a resumption of the disinflationary trend. Meanwhile, US growth has slowed to a trend-like rate, and further weakness may be in store as the economy adjusts to high interest rates and reduced fiscal support. Overall, we expect slower nominal gross domestic product (GDP) growth across G10 economies.

In turn, this slowdown will enable central banks to lower policy rates from restrictive levels, supporting bond market returns. However, while it feels as if the macroeconomic ship is now sailing smoothly toward something resembling normal, it is important to remember that this is all still uncharted waters.

And farther out, the economy is headed toward perhaps even greater uncertainties. One uncertainty is the lack of any historical precedent for the current economic cycle and ongoing post-pandemic rebalancing. But another complicating factor for investors is the upcoming US election, which has the potential to generate significant volatility across a wide range of asset markets.

This paper covers:

  • Macroeconomic outlook-Sailing through uncharted waters by Paul Mielczarski
  • Developed markets fixed income outlook-Year of the coupon continues by Jack P. McIntyre, CFA
  • Global currencies outlook-Lower dollar likely but election a risk by Anujeet Sareen, CFA
  • Emerging markets outlook-Forward real yields point to select opportunities by Carol Lye and Michael Arno, CFA
  • Investment grade credit outlook-Strong fundamentals and attractive yields by Brian L. Kloss, JD, CPA
  • High yield credit outlook-Positive factors outweigh tight spreads by Bill Zox, CFA and John McClain, CFA
  • Structured credit outlook-Three musketeers of carry, convexity, and volatility by Tracy Chen, CFA, CAIA
  • Global equities outlook-Opportunities and catalysts across the global investment landscape by James J. Clarke Sorin Roibu, CFA
  • US equities outlook-Value will have its day by Patrick S. Kaser, CFA and Celia R. Hoopes, CFA

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