Capital’s Portfolio Strategy Group Forum takes place three times each year. The two-day event brings together the entire fixed income group from across the globe for an in-depth discussion on the macroeconomic environment and fixed income markets. Our proprietary fundamental research is the foundation of the discussions and any recommendations that result from these meetings. The outcomes inform our investment decisions and positioning within our fixed income portfolios. Below is a recap of views that emerged from the recent two-day meeting in June.
A moderate improvement in economic fundamentals was a key theme of our discussions. On the other hand, political and policy uncertainty remains elevated despite extremely low levels of market volatility. We believe cautious portfolio positioning is warranted overall should the low volatility environment reverse.
- We see modestly stronger global economic growth and expect a pickup in inflation.
- The range of potential outcomes has narrowed, specially in the U.S. and Europe, but we are skeptical that the recent above-trend growth will be sustainable.
- U.S. interest rate market expectations are lower than our expectations for the Federal Reserve’s (Fed) rate hiking cycle. We are short duration in the front end of the curve.