Slowing of Japanese and US economies to benefit bonds

Weaker economic data in the US and Japan could prove favourable for government bonds, according to Fidelity International. Mark Pearce, product manager for fixed income at Fidelity, says: "The US is slowing down, with the Federal Reserve indicating the tightening cycle is coming to an end. For example, the number of homes available for sale has increased to a level similar to that of the early 1990s' negative equity. Consumers have borrowed heavily against their mortgages and are spending less, and the Fed may need to cut rates to spur demand. We expect the yield curve to become inverted...