Expert Insights - Q&A on global rates and bond yields | Insight Investment

As we approach 2025, the landscape of global interest rates and bond yields is poised for significant changes. In this paper, Gareth Colesmith, Head of Global Rates and Macro Research, and senior portfolio manager, Harvey Bradley, delve into the evolving economic environment and its implications for policymakers and investors alike.

Key Highlights:

• The easing cycle: With many major central banks now cutting rates, their focus may be shifting towards other economic objectives, such as employment.
• Eurozone challenges: The eurozone faces stiff challenges, including the ongoing weakness of the Chinese economy and potential tariffs from the incoming US administration.
• Divergent central bank policies: The Bank of Japan's rate hikes contrast with the easing cycles elsewhere, driven by higher inflation and a weaker yen.
• China's economic struggles: Structural difficulties in China's economy, particularly in the property sector, could have widespread ripple effects.
• Interest rate trajectories: While most central banks are expected to continue easing, interest rates are unlikely to return to previous ultra-low levels.
• Value in shorter maturities: As interest rates are reduced, we see more value in government bond markets at shorter rather than at longer maturities.

This paper provides valuable insights into the factors influencing global interest rates and bond yields, offering the government bond team’s perspective on the outlook for the year ahead.