Fixed Income Moves In 2025

2025-01-29 08:21:00 ET

Summary

• I think right now as we record this today, the bond market and bond market participants feel like the Fed might just be on hold or even hike.
• On inflation, our view is core inflation in the US is roughly around 3.2% year over year, last 12 months. We think core inflation over the course of 2025 will decline to something around 2.5% to 2.6%.
• Some of the things we're talking about today on deficits and debt, those weren't really on the market's radar screen. But you flip through to today, and I think there are a couple of key differences for the bond market that make us more optimistic.

By Ashok Bhatia, CFA

Transcript

Fixed Income Moves in 2025

CIO and Global Head of Fixed Income, Ashok Bhatia, discusses rates, inflation and policy with host Anu Rajakumar and how these forces could impact Fixed Income in 2025.

Anu Rajakumar: With the new US administration at the helm, investors around the world are eagerly preparing for what is to come regarding domestic policy, international policy, tariffs, and geopolitics. How will fixed-income strategies navigate this new pathway? What factors are at play regarding fiscal policy, and how can investors prepare for the year ahead? My name is Anu Rajakumar, and joining me today is Ashok Bhatia, chief investment officer and global head of fixed income, who's here to guide us through these intricate dynamics and share his insights on the asset class. Ashok, thanks for joining me today.

Ashok Bhatia: Thanks, Anu. It's good to be back.

Anu: Ashok, in the Q1, 2025 fixed income outlook that your team published and also in our Solving for 2025 market outlook publication, you predicted an important shift for bond investors this year, essentially going from being intense Fed watchers with a focus on monetary policy to instead focusing more on fiscal policy going forward. Could you begin by recapping that for us and talk about why you think this is an important shift?...

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