August Outlook
August 13, 2019  |  By Hank Cunningham

Where do we go from here? How low can bond yields go?

The ongoing trade feud will disrupt markets further. On the surface, GDP growth is positive in the U.S. and Canada, albeit at a slower pace.

While U.S. consumers and businesses remain confident, retail sales are strong and the employment market remains taut, investors’ eyes are focused on the growing global recession risk. Investors in negative-yield markets are snapping up U.S. (and Canadian) bonds at a torrid clip.

We conclude that bond yields may go lower, even as they touch all-time lows. Strategists are now pondering whether U.S. interest rates will also go to zero. A reversal in this bond yield decline will require a détente in the trade war and evidence that global growth, while slowing, remains positive with some stirring of inflation.

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