Interest rate outlook: Above-trend growth could cause US inflation later in 2018

Invesco Fixed Income shares its views on rates around the world

Time to read: 4 min

US:

We expect US interest rates to be range-bound in the first half of 2018, but with a risk of higher yields in the second half. Our rates view is driven by our analysis of growth, inflation and monetary policy in the US and globally. Our models estimate that US growth approached a near cycle high at just above 3% in the fourth quarter of 2017. Growth should remain strongly above trend at 2.75%3 in 2018.

Inflation is likely to remain low for the first half of this year. Headwinds facing the housing and auto markets could

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What does market volatility mean for fixed income?

As inflation fears roil the markets, we share our outlook for global bond markets

Time to read: 4 min

Market expectations of inflation have risen in recent days, after signs of wage growth — often seen as a harbinger of inflation — appeared in the January jobs report. We at Invesco Fixed Income believe investor concerns that inflation is finally showing signs of life have helped drive interest rates higher and impacted credit markets, where worries over higher interest rates (and their potential impact on companies) have caused declines in stock markets and other risky assets.1

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Interest rate outlook: Hurricanes and Fed policy normalization could impact US inflation

Invesco Fixed Income shares its views on rates around the world

Time to read: 3 min

US:

Recent inflation data are likely to keep the Federal Reserve (Fed) on track to hike interest rates in December. Stable inflation (despite strong growth) should continue to support slow monetary policy normalization going forward. As we expected, price pressures from recent hurricanes are beginning to feed through to inflation data. Uncertainty around the true inflation trend will likely cap US Treasury yields in the near term, despite upward pressure from policy normalization.

Europe:

European growth continues to surprise

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Interest rate outlook: US inflation uncertainty likely to keep a ceiling on Treasury yields

Invesco Fixed Income shares its views on rates around the world

Time to read: 2 min

US:

Inflation continues to firm, although we do not see the potential for a significant upside inflation surprise. Near-term inflation will likely be sufficient to keep the US Federal Reserve on track to raise interest rates in December. That said, we continue to anticipate ambiguity in the data as a result of hurricanes Irma and Harvey. Although US monetary policy is tightening, we expect uncertainty over inflation to keep a ceiling on US Treasury yields.

Europe:

We remain optimistic on European growth which, although

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Interest rate outlook: US yields to stay subdued until inflation prospects rise

Invesco Fixed Income shares its views on rates around the world

Time to read: 2 min

US:

Inflation moved higher in August after five months of negative surprises. This will likely give the Federal Reserve confidence to hike interest rates in December. Although Hurricanes Harvey and Irma could cloud economic data (making it difficult to interpret near-term results), we expect GDP growth to remain modestly above potential at around 2.2% in the coming months. Uncertainty over the inflation outlook is expected to keep a ceiling on US Treasury yields until longer-term inflation expectations pick up.

Europe:

The European Central Bank (ECB) kept policy unchanged in September as expected, although

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