Schroders weather forecast: mixed outlook for bonds – March 2015


Philippe Lespinard

Philippe Lespinard

Co-Head of Fixed Income

Philippe Lespinard forecasts a mixed outlook for bond markets across the globe.

European bonds – Forecast: Sunshine

The sun is shining on the European bond markets. It is still an environment where economic growth is subdued, inflation is very low - close to zero - and we are still in an environment where fiscal policy has to adapt to the new reality. Lastly, the European Central Bank is launching an asset purchase programme which should provide support for the bond market as it will buy vast amounts of government bonds every month.

US bonds – Forecast: Rain

We are less positive in the US, where economic growth is much stronger. The labour market is tightening visibly with the unemployment rate falling to 6% or even forecast to fall below, and while inflation is subdued the fall in oil price is helping consumers. Meanwhile, the Federal Reserve is looking to normalise interest rates in the spring pushing rates towards the 2% mark.

Emerging markets debt – Forecast: Overcast

Energy-producing countries are being hampered by the fall in energy prices, but others such as India and Indonesia are finding it beneficial. Expect a blend of weather conditions for the rest of the world in 2015.

Important information: The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This article is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored.