3 Keys to the 2021 Second Half: Global Rates & Currencies | Lord Abbett
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Economic Insights

Lord Abbett Portfolio Manager Leah Traub looks at three factors that could influence global interest rates and currencies in the second half of 2021. 

Transcript

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[LOWER THIRD: Leah Traub, Ph.D., Partner & Portfolio Manager] Hi, this is Leah Traub, partner and portfolio manager in taxable fixed income, here to talk about the three key things to watch out for in the second half as it relates to global interest rates and currencies.

[LOWER THIRD: Key #1: Watching the U.S. Federal Reserve (Fed).] The first: monetary policy. What is the Federal Reserve going to do in terms of tapering its quantitative easing purchases? [LOWER THIRD: Under quantitative easing, a central bank buys government bonds or other financial assets in order to add money directly into the economy.] The market is expecting a tapering announcement to come in the fourth quarter and for tapering to last for the next year [to] year-and-a-half. You know that will depend on the employment picture significantly improving, as well as signs that inflation is maybe becoming a little bit more sustained. So what will happen with that timeline--will it be accelerated?

[LOWER THIRD: Key #2: U.S. fiscal policy developments.] On the second point, fiscal policy: Will the extra stimulus that we saw this year, particularly in terms of the extended unemployment benefits, roll off as intended, in September? What will happen with the infrastructure bill that's currently being negotiated in Congress? Both of those will determine whether and how much fiscal drag, we will have going into 2022. That, combined with what the Fed’s going to do, will tell us how much of this extra stimulus that we've had over the last year and a half or so will continue into next year.

[LOWER THIRD: Key #3: The pace of global growth.] And then finally, global growth. Will the rest of the world be able to catch up to the gangbusters U.S. growth pace that we're seeing this year? With stimulus [reducing] in the U.S., and as the economy has reopened, we do expect the U.S. economy will slow down a bit going into next year, so we need the rest of the developed world and especially the emerging world to really pick up the baton to carry global growth and trade further into next year.

All these three [factors] will really determine what happens with U.S. interest rates, relative to interest rates in the rest of the world, and then and then what the impact will be on the U.S. dollar.

Outro

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Thank you for listening

Disclosure

Unless otherwise noted, all discussions are based on U.S. markets and U.S. monetary and fiscal policies.

Asset allocation or diversification does not guarantee a profit or protect against loss in declining markets.

No investing strategy can overcome all market volatility or guarantee future results.

Market forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.

The value of investments in fixed-income securities will change as interest rates fluctuate and in response to market movements. Generally, when interest rates rise, the prices of debt securities fall, and when interest rates fall, prices generally rise. The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy.

The information provided herein is not directed at any investor or category of investors and is provided solely as general information about our products and services and to otherwise provide general investment education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as Lord, Abbett & Co LLC (and its affiliates, “Lord Abbett”) is not undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement investor, contact your financial advisor or other non-Lord Abbett fiduciary about whether any given investment idea, strategy, product, or service described herein may be appropriate for your circumstances.

The views and opinions expressed are as of the date of publication and are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. The information discussed is only for illustrative purposes and is intended to provide general investment education and is not intended to provide legal, tax or investment advice. It is not intended to be relied upon as a forecast or research regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment or serve as a recommendation or offer to buy or sell securities.

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