Schroders weather forecast: mixed outlook for bonds – March 2015
9 March 2015
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: This communication is marketing material. 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 material is intended to be for information purposes only and 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. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.