- The fixed income world is beginning to undergo a multiyear transition as aggressive monetary accommodation and government spending across key economies drive higher near-term economic growth rates.
- The result could be a shift to higher real rates as output gaps narrow, as well as moderately higher but stable inflation, reflecting the more persistent and stronger economic backdrop.
- In our opinion, this bodes well for risky assets, but will likely be accompanied by increased volatility and changing correlations.
For further details see:
Fixed Income Investment Outlook Q2 2021: Real Yields, Inflation Breakevens And Risk Assets - The Changing Environment