PGIM Fixed Income 3Q Outlook

While record highs on the major equity indices make for good headlines, the year-to-date returns posted by several fixed income sectors are impressive in their own right. Fueled by the second quarter’s collapse in developed market rates, long U.S. corporates (+15.77%), emerging market hard currency debt (+11.31%), long U.S. Treasuries (+10.98%), and U.S. high yield (10.16%) are among the sectors with double-digit returns thus far in 2019. But with many rate complexes at multi-year lows, what should investors anticipate from fixed income going forward?

•  In “Investment Survival After a Rate Collapse,” Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds, separates the prospects into the “bad news” and the “good news.” He finds that in a low-growth, low-inflation world, the latter may be the more prevalent force in the coming months and quarters.

•  What’s keeping the global economy in its current malaise? Nathan Sheets, PhD., Chief Economist and Head of Global Macroeconomic Research, and the Global Macroeconomics Team touch upon the various, regional factors that continue to shape the global economic outlook in “Seeking Balance in Challenging Cross Currents.

The Third Quarter Outlook concludes with our views on specific fixed income sectors going forward.


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