Second Quarter Market Outlook

This edition of our Quarterly Outlook—At Cruising Altitude With Seat Belts At The Ready—leads off with an analysis of some prevalent market concerns, including quantitative tightening (QT), and provides some perspective on how investors might consider these issues after Q1’s volatility.

We also explore how the balance in global fundamentals served as a stabilizing factor during the recent market turbulence. In addition, we look at how U.S. fiscal policy, heightened trade tensions, and recent developments in China might affect conditions going forward.

Finally, if you’d like additional details about our Quarterly Outlook or would like to ask questions on the markets or global economy, please register for our upcoming Q2 Outlook Webinar using the button below.

Macro & Market Insights

Loco for Emerging Markets Local Debt and FX

Mariusz Banasiak, CFA, Principal and Head of Foreign Exchange Team, and Tim Whyman, Principal and Portfolio Manager, Emerging Markets Team

Despite posting solid total returns and generally outperforming most other major credit indices between January 2016 through the end of Q3 2017, investors still question if EM local currency bonds can continue to post relatively strong returns and outperform. This paper outlines the dynamics that led to the underperformance of EM assets from mid-2011 through early 2016, why the asset class is now on solid footing following several years of headwinds, and the attractive relative value opportunities that exist within EM local debt and FX.

What's Driving Global Inflation?

Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research, George Jiranek, Analyst, Global Macroeconomic Research

Across the major advanced and emerging market economies, inflation has remained remarkably low and stable in the face of diverse economic conditions and shocks. In this paper, we look more deeply at the global inflation process and assess some of the underlying factors that have influenced its recent performance.

Following in Japan’s Footsteps: Have the U.S. and Euro Area Seen a “Lost Decade”?

Nathan Sheets, PhD., Chief Economist and Head of Global Macroeconomic Research

The U.S. and Europe, in the aftermath of the global financial crisis, seem to be experiencing many of the same headwinds that Japan did two decades ago. In our comparison of the experiences of these three major economies, we draw some conclusions about what may lie in store for the U.S. and euro area economies.

From Greece to Bondholders with Love

Jürgen Odenius, Managing Director, Economic Counsellor

What's Up with Global Inflation?

Nathan Sheets PhD., Chief Economist and Head of Global Macroeconomic Research

Municipal Bonds: Financing U.S. Infrastructure Since the 1800s.

Susan Courtney, Managing Director and Head of the Municipal Bond Team, Lee Friedman, Principal, Municipal Bond Team

Global Trade Tensions


Nathan Sheets, PGIM Fixed Income’s Chief Economist and Head of Global Macroeconomic Research, discusses how rising trade tensions are impacting the global macroeconomic backdrop and the bond market. 

A Global Look at FX, EM, and QE


Nathan Sheets, PGIM Fixed Income’s Chief Economist and Head of Global Macroeconomic Research, explains his short-term outlook for the U.S. dollar, its affect on EM economies, and the impact of QE on global bond yields.

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