Fixed income markets will transition from the near-ideal environment we saw for much of 2016. Steven Oh, CFA, Global Head of Credit and Fixed Income, discusses what this will mean for investors.
As we turn the page on what has been a near-ideal environment across the broad spectrum of global credit and fixed income assets for much of 2016 leading up to the US elections, we see change and transition ahead.
Ongoing central bank monetary policy accommodation has suppressed global yield curves while risk spreads have continued to compress. Despite these extraordinary measures, including the widespread experimentation with negative rates, global growth remains lackluster and policies will likely continue to focus on stimulating inflation rather than containing it. Central banks appear to be beginning to realize that while extraordinary measures may be effective in addressing crisis situations, we may have reached the limits of their effectiveness.
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