As the U.S. Hikes Rates, Will Other Central Banks Follow?

By John Lovito - November 9, 2018

The U.S. Federal Reserve Bank has been consistently—but predictably—raising rates since 2015, and that'll likely going to continue for the next year or so. But in the meantime, other central banks around the world are on a bit of a different path.

For example, the Europeans aren't in a position to raise rates right now—they're only tapering their quantitative easing. But we're seeing some data to suggest that the European Central Bank might start raising rates in the middle of next year.

What does this mean for the fixed income investor? Well, it means they might want to think twice before putting money into non-U.S. sovereign debt, even in the developed world. While I'm predicting another U.S. rate hike in December—and three more in 2019—investors know what they're in for when they invest in debt issued by the United States. The big rate moves are, in my opinion, behind us.

Click on my latest quarterly outlook video below for more detail about some of the data we're seeing from around the world, and why I think non-sovereign debt could underperform in the near-term.


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      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.