GM54: "Weakflation" in 2024 ft. Gregory Peters
Top Traders Unplugged
The Importance of Yield and its Impact on Investment
Exploring 'yield is destiny' and its implications on investment and asset allocation, including the negative effects of zero and negative interest rate policy and the importance of higher yields for better returns.
Greg Peters joins Alan Dunne in this episode for a global fixed income perspective on the evolving macro landscape. We hear why “weakflation” may be the most likely scenario for the US economy but that a the risk of recession is three times its typical level. Greg outlines what the secular shifts in the global economy such as the end of the era of secular stagnation, a stagnating China, stickier global inflation and higher return to labour, mean for the global economy and asset markets. We discuss the recent gyrations in then bond market, how the composition of demand for US Treasuries is changing and why Greg is not overly concerned about debt sustainability for the US economy. And we delve into the outlook for emerging markets and why Greg is constructive on the outlook for EM excluding China.
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Episode TimeStamps:
02:42 - Introduction to Gregory Peters
05:15 - What types of portfolios PGIM Fixed Income running?
06:28 - Peters' perspective on the state of global macro
11:44 - Peters' response to the inverted curve
15:30 - Is Peters concerned about the U.S debt?
19:36 - Japanese investors in a tough spot
22:11 - Financial repression and domestic bias
24:11 - The yield is destiny
27:28 - What range are we operating in?
28:43 - Will inflation be stickier than we expect?
33:03 - The impact of a changing globalization
35:42 - Analyzing the poor productivity numbers
38:05 - The longer term outlook of the Chinese economy
42:54 - China as a potential component in a global fixed income portfolio
44:27 - Opportunities in emerging markets
46:47 - Peters' thoughts on the central bank response function
49:13 - How would central banks respond to a worst-case scenario?
51:29 - The possibilities of recession
56:19 - Advice for other investors
57:59 - Thanks for listening
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