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Caution or Precaution? Fixed income outlook for the second half of 2019

Bond market performance in 2019 has been dominated by a theme of central banks pivoting towards easier policy. In particular, the US Federal Reserve has signalled potential interest rate cuts, marking a meaningful shift compared with the hiking cycle of the past three years (Figure 1). This has been a driving force behind double digit returns in many sectors of the bond market in the first half of the year.