The central bankers’ balancing act

This week’s central bank meetings in the US, UK and the eurozone are highlighting the difficult position developed economies are in as growth slows and inflationary pressure remains elevated.
What are fixed income markets telling investors about the prospects for interest rates around the first anniversary of the credit crunch? What are the implications of slowing growth, falling demand in developed economies on government debt in newer markets?
As global bond markets have doubled in size in the last decade, where do the opportunities lie and where are the new sources of alpha?
Dr. Michael Hasenstab is senior vice-president and portfolio manager of the Templeton Global Total Return Fund at Franklin Templeton Investments. He is also co-director of the international bond department within Franklin Templeton fixed income team that manages over $184bn of fixed income assets worldwide. He is also Portfolio Manager of the Luxembourg-registered Templeton Global Total Return Fund and co-manager of the UK-registered Templeton Global Total Return Bond Fund.