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For Professional Clients and, in Switzerland, for Qualified Investors only. In Israel for Sophisticated Investors only.
English
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IDEAS AND KNOWLEDGE TO INSPIRE YOUR INVESTMENTS THINKING
23 January 2020

Under pressure

Global central banks eased policy in 2019 and, in the eurozone and Japan, interest rates are in negative territory. With inflation still elusive and the growth outlook slowing, bond yields are at historically low levels. The average 10-year yield among G7 countries reached a low of close to 0% during 2019, and 10-year yields were negative in Germany, France and Japan at year end.

 

This backdrop of stuttering growth has left many people feeling disenfranchised, with perceptions of growing inequality and divisions growing in many societies. Support for populist political parties has grown as long-term yields have declined and increasingly radical proposals are emerging for both monetary and fiscal policy.

 

Although we believe that most of the major central banks will keep interest rates unchanged in 2020, there is a growing risk that more radical policies move into the mainstream. If growth fails to reaccelerate, some central banks may be forced to look for new ways to stimulate growth. How the debate around this evolves could well be a key driver for global bond markets over the longer term.

 

Gareth Colesmith, head of global rates and macro research, Insight Investment.

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Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.

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