In this episode of our Global Perspectives Podcast series, Co-Heads of Global Bonds, Jenna Barnard and John Pattullo discuss how conditions are in place for bonds to deliver potentially strong returns in 2023 as the market registers the collapse in inflation and central banks retreat.
Key takeaways:
- Central banks are currently blinkered to fighting inflation but lead indicators suggest developed market economies are entering recession and a deterioration in the jobs market - which typically lags - should begin to shift central bank policy.
- Bond yields are failing to reflect the impending economic downturn and collapse in inflation but if they do recouple with the economic data we expect yields to fall rapidly.
- Declining yields should push up bond prices, with government and investment grade bonds potentially positioned to perform well in 2023.
