Global Fixed Income Strategy - June 2019

Monthly insights and updates from the Invesco Fixed Income team

Jul 3, 2019 | Invesco Fixed Income

In this latest edition, Invesco Fixed Income’s macro team shares its outlook for Fed policy. As we approach the July Fed meeting at which a cut is fully priced, the Fed has a tough assignment ahead. Either the Fed needs to deliver a cut in the face of potentially healthy market sentiment (if current price action continues), or it disappoints by delivering no cut while continuing to convince the market it is committed to the new framework. Communication will be key. The team believes the Fed will cut rates in July unless economic data surprise to the upside.

This issue also discusses the risks to the global economy posed by ongoing trade tensions and zero in on implications for emerging markets. Going forward, the team sees the bigger risk to global EM growth coming from uncertainty. In a globalized production system, policy uncertainty is bound to weigh on business and consumer sentiment and investment plans. Until a trade deal can be reached, the team believes these concerns tilt the risks to the global economy firmly to the downside for 2019-2020. On the positive side, we see room for more policy action from EM central banks. The team thinks this should help mitigate some of the risks to EM growth.

Finally, in two Q&A’s, the team speaks with Invesco Chief Economist John Greenwood to get his take on the popular concept, “Modern Monetary Theory”. The issue also speaks with Ann Ginsburg, Head of Thought Leadership Fixed Income, about the evolution of the strategy report on the fifth anniversary of its publication. Thank you to our readers for your support!

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