The fixed income market in the third quarter of 2024 is complex due to varying economic conditions across major global economies.
The United States has a strong economy but recent weakness in the labor market suggests a potential slowdown. The Federal Reserve has implemented a rate cut and further easing is expected. Inflationary pressures persist, but declining bond yields and oil prices create a more accommodative financial environment.
In Europe, the European Central Bank has also eased monetary policy due to challenges in the Eurozone. Weak manufacturing data and below-trend growth highlight the divergence between the US and European economies.
China has implemented stimulus measures to stabilize growth and bolster market confidence. The focus is on monetary policy, housing, and equity markets. China's economic stability depends on the recovery of the housing market.
Emerging markets show promise, with attractive valuations and potential growth catalysts. Corporate issuers are preferred in emerging market investment-grade bonds, and Asia high-yield bonds have attractive valuations and reduced exposure to the Chinese property sector.