Letters from Kyiv
In a recent trip to Kyiv, Ukraine, PGIM Fixed Income's priorities were threefold: Confirm the political outlook given the country’s political outlook; Assess the status of Ukraine’s IMF program and macroeconomic policies; Evaluate the fallout, particularly for the National Bank of Ukraine, from the ruling that invalidated the nationalisation of PrivatBank, the country’s largest private bank. Our findings from the trip reinforced our positioning views on Ukraine’s hard currency sovereign debt.
The Fed Clears the Way for Cuts as the Market Seeks Even More
The dovish tilt to the Feds June meeting created more optionality for itself, clearing the way for possible rate cuts in the second half of 2019 if incoming data indicate that economic growth is at risk of downshifting and prospects for a pickup of inflation towards 2% are fading. PGIM Fixed Income’s base case now expects two rate cuts in the second half of 2019—more than what the median Fed projection has penciled in, but less than the three cuts the market has been pricing in.
An Overdue Recalibration of the Credit Ratings for Mexico and Pemex
PGIM Fixed Income discusses the dynamics that led our internal credit ratings on Mexico and Pemex below the average of the rating agencies, our outlook going forward, and how this view is expressed in our investment strategy.
The Great “Hollowing Out” of the U.S. Job Market
In assessing the strength of the U.S. labor market since the global financial crisis, it is important to consider the quality of the jobs that have been created. PGIM Fixed Income’s research finds that the jobs created through the current expansion have a distinct “barbell” feature consisting of a remarkable “hollowing out” of jobs in the middle of the income distribution.