The emerging trade war triggered by U.S.-imposed action against Mexico, Canada and China “is likely just the beginning, with tariffs on Europe and universal ones to follow suit over the coming weeks,” said Andrzej Skiba, head of BlueBay U.S. Fixed Income at RBC Global Asset Management.
“This will be inflationary, and the Fed won’t likely be able to cut rates in this environment,” said Skiba, who is based in Stamford, Conn.
“This could put pressure on fixed-income assets, and we see more spread widening and risk ahead, something we positioned out strategies for having de-risked in recent months,” he said in an email. “We favor short-duration assets, and as volatility picks up, we hope to re-engage with the asset class at better entry points once the dust settles.”
