Since July last year, upticks in economic activity in the US, Europe and the UK – in part driven by the loosening monetary conditions in China a year earlier – were pointing to a return of growth and inflation well before the election of Donald Trump. John Pattullo, Co-Head of Strategic Fixed Income, explains this view and reflects on the shift in sentiment within markets and how Trump’s election, while not the cause, may exaggerate the effect.

John also cautions that this cyclical uptick should not be confused with the long-term structural trends that the Strategic Fixed Income team has talked about in recent years, and explains that he believes we are not yet at a point to call the end of the bond bull market. He also outlines recent tactical duration moves and explains how the team’s views are currently being implemented at a portfolio level.

• The reflation theme may lose steam as economic indicators point to a mild slowdown in China and the US towards the end of Q1
• While the US Federal Reserve may want to raise rates three times this year, it may not have the opportunity
• Still feels too early to call an end to the 30-year bond bull market