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 June 2024. The views of individual portfolio managers and analysts may differ. © 2024 Capital Group. All rights reserved. Data as at 30 June 2024, and attributed to Capital Group / Bloomberg Index Services Ltd, unless otherwise stated.

Capturing attractive yields amid shifting central bank actions

• The US economy remained resilient during the second quarter even as it showed signs of slowing. Inflation moderated, though progress fell short of expectations.
• A data-dependent Federal Reserve (Fed) pushed out its forecast for lowering interest rates as it reduced the number of expected rate cuts in 2024. 
• Global growth has diverged, and we expect this trend to continue.
• As inflation moderates globally, some central banks have begun cutting rates..
• Resilient growth in the US should be favourable for risk assets, and a soft-landing scenario may support current valuations. 
• Our highest conviction ideas call for a steepening of the yield curve and positions in agency mortgage-backed securities (MBS) and credit sectors.