Schroder Investment: The Federal Reserve still has the potential to cut interest rates this year, and short to medium-term bonds can better control interest rate risks
Schroder Investment stated that despite the fluctuation in inflation data in certain months in the United States, they believe that the overall direction of the US economy is still heading towards a "soft landing." They expect that the Federal Reserve is still likely to cut interest rates this year, just with a delayed timeline. Schroder Investment currently prefers short to medium-term bonds to better control interest rate risks. They believe that the US economy is not in a scenario of "no landing" and anticipate that the inflation level will remain relatively high, with the job market not overheating. Regarding the Asian bond market, they believe that the Chinese government's support measures for the real estate market have improved investors' views on domestic real estate bonds. However, they still need to observe the trend of domestic corporate bonds in the next 3 to 6 months
According to the information from Smart Finance App, Schroder Investment Management stated that although there have been fluctuations in inflation data in certain months in the United States recently, Schroder Investment Management believes that the overall U.S. economy is still steadily moving towards a "soft landing." While the economy continues to grow, inflation is gradually slowing down. The Federal Reserve is still expected to cut interest rates this year, but the timing of the rate cut may be slightly delayed compared to the market's original expectations.
From the perspective of bond investment portfolios, Schroder Investment Management believes that due to the ongoing inversion of the U.S. Treasury yield curve, with short-term rates higher than long-term rates, Schroder Investment Management currently prefers short to medium-term bonds. In the current situation, assuming that interest rates will remain relatively high in the near future, short to medium-term bonds will better control interest rate risks.
Currently, Schroder Investment Management does not see a scenario where the U.S. economy experiences a "no landing." The company also believes that the U.S. will maintain a relatively high level of inflation, the labor market is not overheated, the probability of the economy being stronger than expected is relatively low, but financial market sentiment may become tense again with repeated fluctuations in economic data. Therefore, bond investors must remain flexible in managing interest rate risks.
Regarding the Asian bond market, Schroder Investment Management stated that due to the Chinese government's introduction of new measures to support the real estate market, investors' views on domestic property bonds have improved recently. However, Schroder Investment Management believes that it will still take some time to observe the performance of domestic property enterprise bonds in the next 3 to 6 months