June 03, 2021
President Biden’s budget confirms our view that the U.S. economy will face a massive fiscal drag next year. After the pandemic-fighting fiscal stimulus expires and the pent-up demand from the lockdown fades, it will take quite some time before the Fed achieves its dual mandate.
Global fixed income managers should maintain duration at neutral levels. There is the risk of some sort of a “taper tantrum” in the coming months. However, we believe that any sell-off should be more modest in comparison to the 2013 episode.