Central bank actions could take a backseat to growth trends in pricing bonds

Amid slower economic growth and more benign monetary policy, we believe that this year bond prices will be driven less by inflation and central bank policy and more by economic growth dynamics. Rather than seek to play the timing of interest rate reductions, we think it will be more effective to focus on the ultimate destination of rates and adapt portfolios accordingly. We favor putting cash to work in short-duration fixed income, while emphasizing quality credits and, selectively, pockets of value in global markets.