Bonds finished 2024 with positive returns, and we believe fixed income assets can continue to shine. Solid economic growth, sticky inflation and a slow pace of U.S. Federal Reserve rate cuts should keep shorter-term yields elevated. And relatively stable longer term rates mean higher yields can help build portfolio income and return potential. In this environment, we like well-diversified multisector and core plus bond strategies in particular.
The year started with some sharp moves in fixed income, with developments in terms of inflation trends and labour market conditions. So, how does this align with our broader fixed income outlook for the year?
High yield bonds ended 2024 on…a bit of a high. And it doesn’t seem set to end anytime soon. With economic fundamentals showing slow-but-steady improvement, led by a surprisingly resilient US economy, we see further scope for positive performance from high yield bonds as we progress into 2025.