The Next Chapter in the U.S.-China Trade War
With President Trump and President Xi agreeing to restart trade negotiations, our baseline remains that the both face compelling incentives to resolve the conflict. Trump needs a strong economy and a rising stock market leading up to the presidential election in November 2020. Xi has the dual of objectives of hitting his 6.0-6.5% growth target and avoiding further accumulation of debt and leverage in the economy. Given this backdrop, we see four scenarios as to how the trade talks might proceed over the next year.
Uncovering Alpha Opportunities in Emerging Market Corporates
This paper touches upon the market opportunity across EM corporates and follows with examples of how global investors with in-depth knowledge of local business practices, politics, and corporate culture can take advantage of the idiosyncratic opportunities presented by EM corporate bonds.
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.