Central banks ready to double-down

The actions of central banks have had an unprecedented impact on bond markets. The outlook for US bond yields is tied as never before to the policies of the Fed, the BoJ, and the European Central Bank (ECB). It should come as no surprise then that we have been paying very close attention to the public utterances of central bankers across the world. Any hint of retreat from the (now) conventional policies of the last eight years would send tremors through bond markets. Because of this, we were cautious going into the Jackson Hole Symposium, waiting to see if any of the presenters would critically question QE and negative interest rate policies or suggest alternatives. We probably should have expected the symposium’s self-congratulatory tone. If anything, central banks like the ECB and BoJ appear ready to double down on these policies. We expect US bond yields to continue to trend lower as QE policies steadily reduce the available supply of high-quality term assets. (James Alexander, Co-Head of Global Fixed Income & Head of Australian Fixed Income)