The Outlook for Fixed Income in 2019

Time for bond investors to position for cycle end

Global fixed income investors faced a challenging 2018, as yields moved higher, curves flattened and credit spreads widened. Furthermore, emerging markets currencies and bonds had their worst showing for several years. This price action is indicative of late-cycle behaviour as markets feel their way through a monetary hiking cycle and vulnerabilities are exposed.

Looking into 2019, we expect a similar dynamic as we move closer to the cycle’s end.

In light of this outlook, investors should be tactical with their allocations, opting for quality and moving higher up the credit spectrum in both high yield and investment grade.

Key takeaways:

  • Manage credit risk and focus on quality
  • Consider short-term yields as US rates rise
  • Explore emerging market bonds and currencies for value
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More on the 2019 Global Market Outlook

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