Paul Hsiao, PineBridge Investments
Economist, global economic strategy
Our outlook for risk assets at the start of the year hinged on a question: can the Fed and China successfully engineer soft landings after implementing growth-restraining policies in 2017 and 2018?
So far it seems policymakers on both sides of the pacific have delivered, albeit amid much tougher economic and political conditions.
Looking ahead, we expect the Fed to cut rates twice more in the next 12 months – a marginally more hawkish forecast than consensus expectations for three cuts.
We also expect yields on 10-year US Treasuries to trend around the current levels of 1.75%-2%. That would keep the important yield curve relationship at very flat, though not inverted levels, consistent with our forecast of slower global growth over the next year but not a recession.