Capital Ideas^TM

Quarterly macro and market insights from Capital Group’s fixed income team

The statements expressed represent perspectives from Capital Fixed Income Investors, as at 30 September 2023. The views of individual portfolio managers and analysts may differ. © 2023 Capital Group. All rights reserved. Data as at 30 September 2023, and attributed to Capital Group / Bloomberg Index Services Ltd, unless otherwise stated.

Cautiously constructive amid divergent global economic trends

• Central banks globally have largely been successful in reversing inflationary pressures, though inflation remains above target in most jurisdictions amid persistent wage pressures.
• Central bankers have indicated that policy rates are at or near their peak. However, diverging trends may lead US economic growth to outpace that of Europe and China. This will likely result in interest rates moving at a different pace in economies globally.
• China’s slowing growth has a dampening effect on emerging markets commodity exporters as well as the European industrial complex.
• Excesses in the global economy are largely concentrated in government balance sheets. Consumers and corporations are in reasonably good shape.

Risk factors you should consider before investing:

• This material is not intended to provide investment advice or be considered a personal recommendation.
• The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
• Past results are not a guide to future results.
• If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
• Depending on the strategy, risks may be associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.