Global Fixed Income Strategy – Monthly Update
Global macro strategy
Macro conclusions from the IFI Summit
Twice a year, investors from across the Invesco Fixed Income platform gather at the IFI Global Investors’ Summit to discuss and debate their views on global macroeconomic trends. Macro themes play an important role in IFI’s investment process and our framework of “macro factors” focused on growth, inflation and policy, helps us project macro trends and interpret market movements. At our June Summit, IFI investors provided their views on global macro developments. Below we share their main conclusions.
US: AI is the dominant macro theme, but its effects are uncertain
Executive summary
• US potential growth could rise to roughly 2.6% by the end of 2027, largely because of an expected productivity boost from AI. But the timing, magnitude, and distributional effects of AI remain highly uncertain.
• We expect 2026 growth to moderate below potential to around 1.8%–1.9%, which could create or widen slack.
• Overall, we view the US as a two-speed economy: AI, technology investment and higher-income consumers are supporting activity, while the broader economy is softer.
• We expect the Federal Reserve (Fed) to remain on hold. This year’s moderating growth, fading tariff effects, easing shelter inflation, and contained wage growth underpin our view that inflation has likely peaked and should move lower.
AI is the defining macro theme of the second half of the 2020s but history teaches that technological adoption and measured productivity gains don’t always occur simultaneously. Personal computers became visible in business and society well before aggregate productivity accelerated; the productivity pickup did not clearly appear until around 1997, roughly 15 years after the PC’s introduction. However, AI adoption appears much faster than with past technologies.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating.
Non-investment grade bonds, also called high yield bonds or junk bonds, pay higher yields but also carry more risk and a lower credit rating than an investment grade bond.
The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.
The performance of an investment concentrated in issuers of a certain region or country is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified investments.
