As equities and other risky assets continue to climb northward, our outlook for global fixed income in 2013 remains the same: Don’t fight the central banks, but be wary of the risks.
-Christine Hurtsellers, CIO fixed income, ING
-Mike Mata, head of multi-sector fixed income, ING
-Matt Toms, head of U.S. public fixed income, ING
Bond Market Outlook
Global Interest Rates: Developed sovereigns are still broadly unattractive, but global central banks appear poised to ease.
Global Currencies: We prefer EM currencies that will continue to benefit from positive global growth and tolerate further upward pressure on the U.S. dollar.
Corporates: We are neutral on corporates, as profit growth is decelerating and debt is rising faster than cash flow.
High Yield: Spreads continue to compensate for default risk, though record all-in yields and high dollar prices limit upside.
Mortgages: Uncertainty surrounding the Fed’s exit strategy is a concern, but Bernanke continues to back bond-buying programs supportive of mortgages.
Emerging Markets: We remain positive on EMD, particularly in local currencies, despite recent spread widening and U.S. dollar strength.
