“Our analysis of the cycle of activity and inflation indicates a strong rebound in the Eurozone, which has now entered an expansionary phase together with the United States, while Japan and the United Kingdom remain in recovery”. Word of Nicolas Forest, Candriam’s global head of fixed income, that over the next 18 months we should see some tapering with the gradual reduction of central bank buying programs. This, of course, will impact bond yields and credit markets, with traders anticipating tapering announcements in the second half of the year. The Bank of England and Canada have already announced measures to this effect, and the Fed should take action in 2022. As for Europe, however, the Pepp should end in March next year. At the moment, however, key indicators, such as the labor market recovery, are still far from complete and well below the thresholds that would trigger a Fed tapering announcement. “In Europe, all members of the EU have ratified the decision on own resources which establishes the way in which the EU budget is financed », explained Forest. “Therefore, the European Commission can start borrowing resources to finance the recovery program.” According to the expert, the Recovery Fund should support the economic recovery in the second half of 2021, while vaccination campaigns will continue to represent another source of support across the EU. The month of June could therefore be the time when the first mutualized EU debt issue will be made. “On the duration front, we maintain a negative view on European core rates, which we believe are too onerous, also expecting a decrease in their relative outperformance recorded in the first quarter in the wake of improvements on the economic front, inflation and vaccinations”, he said. Foster warned. “We confirm our positive view on non-core countries (Italy and Portugal), which are well supported by the ECB’s asset purchase programs and the upcoming EU Recovery Fund, but we have taken a neutral view on Spain after its high performance”.