Janus Henderson Investors: ISG Insight - Can the market’s immunity last?

The ISG recently met to discuss the outlook for bond markets and concluded that economic growth is likely to remain modest in the quarters ahead.

Summary:

1. The United States economy has decisively rebounded from the lows reached in March and April but momentum has waned in both the economy and the financial markets. Economic growth will likely remain modest, balanced between pent-up demand and partial closures over the next few quarters, but positive nonetheless.
2. We think credit markets responded rationally to the restoration of liquidity and the promise of central bank support, but it is difficult to imagine a sustained rally from current levels without confidence that economic growth will persist.
3. We believe the yields available in credit markets generally are attractive, although further spread tightening is likely to be limited.

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