Articles - US outlook: fiscal policy, monetary policy & credit ratings


Schroders Quickview - US outlook: fiscal policy, monetary policy and credit ratings

 Comment from Schroders' US Fixed Income Team: David Harris, Senior Portfolio Manager, and Ed Fitzpatrick, Fund Manager on US fiscal and monetary policy and credit ratings –

  

 Key Points:

     
  •   A US downgrade to default (worst-case scenario) by the rating agencies will be a temporary event. The US has the ability to meet its obligations. 
  •  
  •   We do not see the weak jobs report as a sign we’re dipping back into recession, though the odds have certainly increased and the outcome is more dependent on fiscal and monetary decisions.
  •  
  •   We expect a very drawn-out monetary policy normalisation, with the effectively zero interest-rate policy with us for quite some time.
  •  
  •   We expect the debt ceiling to be raised to avoid a technical default.
  •  
  •   Fixed income markets are likely to be volatile in the months ahead as debt levels, fiscal policy and risk appetites clash.

  

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