In an environment of pervasive macro risks, three themes in PGIM Fixed Income’s Q2 Outlook warrant emphasis:
- Bonds are positioned for an extended period of solid returns, and they should outperform cash and equities if serious downside risks materialize;
- Ongoing policy confusion seems destined to continue to prompt bouts of market turbulence that precipitate relative value opportunities;
- The post-COVID bond market has been prone to dramatic overreactions followed by course corrections with a clear lesson: don’t confuse extreme market movements with changes in fundamental market trends.
Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds, looks at the factors that may support fixed income performance amidst the relentless uncertainty as well as the divergent trends across global markets in “Tactical Turns in the Slow-Go Bull Market.”
As PGIM Fixed Income distills the first quarter’s volatility and confusion, they see further economic moderation ahead with sizable risks to the downside. Not surprisingly, the tails of their distribution have thickened as the global trading order gets turned on its head. In the U.S., the delta pertains to the tail scenario of rising recession risks. In the euro area, the latest tariff developments potentially offset some of Germany’s bold fiscal announcements. Find additional details in “Convergence in a World of Thick Tails,” by Katharine Neiss, PhD, Deputy Head of Global Economics & Chief European Economist.
At a glance – PGIM Fixed Income sector views:
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The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.
Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
The full PGIM Fixed Income Market Outlook is available for professional investors only.
The views expressed in this article are those of PGIM Fixed Income as of April 2025.
Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information, nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
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Prudential Investment Management Services LLC is a Prudential Financial company member FINRA and SIPC. PGIM Fixed Income is a unit of PGIM.
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