Fixed-Income Outlook: Key takeaways
- As Fed tapering unfolds, we expect to see stronger growth from developed markets, while emerging markets in aggregate may experience further currency and capital market weakness.
- In the United States, declining labor participation continues to drive falling unemployment figures, and may harbor the beginning of a wage inflation surprise.
- We expect credit, liquidity, and prepayment risks will continue to be rewarded by the market in the months ahead, while interest-rate risk remains unattractive due to its asymmetric risk profile.
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