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Ahead of the curve: Investing in an uncertain world

Jayme Colosimo Erica Salvay

The economic outlook has become more unpredictable, and the risk of a slowdown in growth and a potential recession has increased. But we believe fixed income investors should continue to focus on the long-term fundamentals.

 

If the present cyclical problems become structural, this could have a long-term impact on markets. Meanwhile, fiscal expansion in Germany and the eurozone could have longer term impacts. Yields, which are a good proxy for long-term total returns, remain high and can therefore absorb a significant amount of near-term volatility. Meanwhile, high-quality assets should benefit from duration in a recessionary scenario, where rates are expected to fall, and also provide diversification. 

 

In this paper, we explore these developments through our usual cyclical and structural lenses, as well as the investment implications of this evolving macroeconomic environment.

 

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Jayme Colosimo is an investment director with 24 years of investment industry experience (as of 12/31/2024). She holds an MBA and a bachelor’s degree in international business from Westminster College.

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Erica Salvay is an investment director with 20 years of investment industry experience (as of 12/31/2024). She holds a master's degree in investment management from Cass Business School and a bachelor's degree in economics from Washington University in St. Louis. She also holds the Chartered Financial Analyst® designation and is a CFP® professional.

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