Inflation rates have declined significantly from their 2022 peaks, but the momentum of the downtrends has slowed recently. Early market expectations for central bank rate cuts have been postponed well into 2024 due to resilient economic data. Bond yields have risen significantly over the last one and a half years and there are some indications that they are broadly in line with economic fundamentals now. Yields have risen to levels that should prompt investors to consider portfolio realignment.

In this CIO Viewpoint Fixed Income – Bond markets in line with fundamentals – we discuss current conditions on bond markets as well as the short- to medium-term outlook.

Key takeaways:

  • Recent strong U.S. data caused market pricing to push rate cut expectations into the future. The ECB is expected to cut its key rates in June.
  • Government bond yields have risen to levels broadly in line with fundamental economic data.
  • Data-dependent central bank decision-making argues for a broad sideways pattern of bond yields. Investors are likely to continue to focus on carry.


The CIO Viewpoint below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.



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