U.S. investors have stopped worrying that inflation will pick up, Invesco reported Monday in releasing its first global fixed income study.
Now, a majority of investors look forward to moderate growth with little risk of inflation.
“This consensus tells us why yields are so low,” Invesco’s chief macro strategist Rob Waldner said in a statement. “The big risk for investors is that they are underestimating inflation risk in a strong global economy.”
Invesco’s study, conducted by NMG, involved face-to-face interviews with 79 global fixed income specialists, mainly heads of fixed income, chief investment officers and heads of investment strategy.
Three in five fixed income interviewees considered the global economy on the path to recovery, but did not foresee the typical post-slump normalization: recovery, interest rates and inflation. Instead, they expected a “new normalization,” characterized by continued relatively low yields, low inflation and central bank support.
The study also found a strong appetite among global investors for alternative credit, such as bank loans and real estate debt, which they saw as offering increased alpha, generating higher income returns and providing increased diversification.