Fixed Income
Low policy rates are the norm among developed countries, but central banks have different agenda for their monetary policies. US has been signalling QE taper for a while, and taper is expected to happen sometime this year. Canada always lags behind US in raising interest rate, thus Canadian government fixed income will underperform less than US. ECB continued to cut policy rate to combat disinflationary pressure. UK came out of recession earlier than Eurozone; central bank indicated rate is going to stay the same.
As developed countries raising interest rates, in order to ease capital outflow, particularly those emerging market countries suffered the most from current account deficit are also going to raise rates. The other emerging market countries are likely to continue stimulus to further boost the economy.
Overall, global government fixed income is going to continue underperforming. Growth has to come from corporate bonds and alternative fixed income.
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