US President Donald Trump has renewed his call for easier monetary policy from the US Federal Reserve, calling for rates to be reduced below zero. In a speech to the Economic Club of New York, President Trump said negative rates gave other countries a competitive advantage over the US complaining that "our Federal Reserve doesn't let us do it."

But we believe the rewards from negative rates have so far been relatively modest, while the downside is increasingly evident.

So, negative rates have not proved the great advantage that President Trump’s comments might suggest. Our view is that a further move towards negative rates in the Eurozone or Switzerland will meet stronger resistance. That said, we do expect rates globally to remain lower for longer, with the Fed on hold and the ECB remaining accommodative. Under these circumstances, we favor carry strategies and we are overweight USD-denominated emerging market sovereign bonds.