07 Sep 2023

Janus Henderson: Global Perspectives: Dissecting the cycle

Co-Heads of Global Bonds, Jenna Barnard and John Pattullo, discuss policy lags and why they believe the market is too pessimistic on inflation improvement but too optimistic on the growth environment.

Key takeaways:

  • Headline inflation in the US has retreated faster than during the many inflation episodes in the 1940/50s, let alone the more persistent shocks of the 1970s. The current generation of central banks is waiting for lagging core inflation to follow, and these dynamics are just beginning to kick in to the downside in a convincing way in the US. Other developed economies have inflation cycles that lag the US by around four to six months.
  • Headline jobs data is strong but it traditionally lags, especially in an inflationary downturn. Lead and coincident jobs data such as temporary employment and overtime hours continue to contract.
  • Whilst the market debates soft vs. hard landing, there are many opportunities to generate defensive yield (i.e. not stretch down in credit quality). Examples include high front-end sovereign bond yields creating opportunities among short-dated investment grade credits and AAA US agency mortgage securities yielding the same as the US BBB investment grade bond index.


Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

High-yield or “junk” bonds involve a greater risk of default and price volatility and can experience sudden and sharp price swings.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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