Strategy & Insights

Money Market and Ultra Short-Term Bonds

As the global trade paradigm shifts, countries are reassessing old economic configurations.

Consider, that with the United States retreating from free trade, developed market economies can now expect the contribution from net trade to economic growth to decline in the coming years. Indeed, those same economies will now need to chart a different course as the degree of access to U.S. markets has changed dramatically.

Given the backdrop, the priority for our fixed income portfolio is to focus on strong credit and to optimize yield at a shorter duration.

In the U.S., data that tracks the real economy appears to be slowing, but we don’t get the sense that the Federal Reserve is in any hurry to ease policy rates. That’s largely due to the potential from ​‘stickier’ consumer prices as tariffs start to make their presence felt.

One of the more important themes over the past several months has been the sell-off in the long-end across numerous jurisdictions.

Of course, this theme has been led by a combination of macro and idiosyncratic factors – the latter of which has resulted in considerable spillover effects.