Standish views interest payments on bonds more likely to generate cash for investors than capital appreciation.
The company expects global economic growth of 3.3% in 2013, slightly below the consensus forecast of 3.6%.
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"In developed markets, we are more pessimistic than the consensus on the United States due to the impending fiscal cliff. In emerging markets, we have downgraded our forecast for Asia because of weaker global demand. However, we have upgraded our forecast for Latin America because of stronger domestic demand and higher commodity prices," said Thomas Higgins, Standish chief investment officer.
Standish executives David Leduc added, "Given the Fed’s assurance that interest rates will remain low for a longer period of time, investors can expect to benefit from the additional yield of corporate bonds," Leduc said.
"Peripheral European government bond yields still have room to fall if and when the European Central Bank begins buying their debt under the Outright Money Transactions Program," he added.
Higgins also cautioned that the markets still face the threat of volatility from the uncertain outcome in dealing with US fiscal cliff and the timing of bail-out requests in peripheral Europe.
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