Jenna Barnard, Co-Head of Strategic Fixed Income, explains how the persistence of interest rate divergence remains central to the team’s thinking on the outlook for the bond markets.

Key points:

• Bond markets will be dominated by interest rate divergence across developed economies over the next few years
• Central banks in a number of economies such as Australia and Europe simply do not have the impetus to hike rates…
• …but some have followed the US Federal Reserve, such as Canada
• Divergence in interest rates create opportunities to actively manage duration