Fixed Income Outlook: Bonds Remain Expensive

Fulcrum fixed income strategist Andrew Bevan reflects on the drivers of the bond market in 2017 and where returns will come from in the remainder of the year

External Writer 2 August, 2017 | 11:12AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. 

Ten-year government bond yields finished the first half of the year lower in the US, but higher in Canada and Europe. Markets were surprised by the poor US economic data in the first quarter and loss of confidence in the new administration to deliver fiscal stimulus, while political turbulence in Europe anticipated by many failed to materialise.

Core inflation rates fell, encouraging the view that central banks would keep low rates on hold, lending support to riskier assets such as equities. Despite the Federal Reserve hiking interest rates, the dollar’s trade-weighted index fell by nearly 10%.

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