Rick Rieder

An aging population is likely to keep global economic growth muted in the years to come. This is primarily because the dynamics of the population are rapidly changing.

Changing demographics impact investors in many ways. The demand for bonds could increase, putting downward pressure on yields.

The American economy is facing major structural issues that have the potential to thwart economic progress. The most important hurdle facing the US economy is an aging population.

Despite headwinds in the form of soft wage growth, low inflation, and a falling labor participation rate, the labor market looks robust.

So now that the Fed rate liftoff has finally arrived, should you flee to market sidelines? If you can believe history, the answer is an emphatic no.

One of the big-picture shifts currently taking place is aging populations, especially in developed nations. Populations are rapidly aging in most developed countries.

The trend of soft wage growth persisted in February. Wage growth hasn’t been able to break out of its rut. It continues to stay at a YoY level of 2%.

Forget the September versus December debate. The Fed may already be behind the curve, according to Rick Rieder.

Lost in all the chatter about interest rates is a structural phenomenon that may be of far greater significance: demographics.

San Francisco Fed president John Williams noted that the Fed’s ability to hold off a liftoff in rates is “more limited” than its ability to tighten. A rate hike could be expected in September if the economy continues to grow in the next two months.

Solid employment growth seems to point to the improving health of the US economy. The US markets cheered the April jobs market report on Friday, May 8, 2015.

Select areas of the EM debt sector hold good potential, as many of these countries exhibit low leverage levels and are currently funded through year-end.

Technology has revamped inventory management for companies in a big way. More and more companies are carrying less and less physical assets.

Technology (XLK) is advancing by leaps and bounds. The diffusion and adoption rates for new technologies have risen over the years as the population has become more tech-savvy.

Lastly, as I mentioned in an earlier post, the Fed’s zero interest rate policy may actually be inhibiting economic growth and job creation in unintended ways.

Both the labor force participation rate, which came in at 62.8%, and the employment-population ratio, which came in at 59.7%, were unchanged in August.

The US labor market has shown tremendous resilience amid concerns over various issues, like aging demographics.

The big theme of 2015 was the Chinese (FXI) (MCHI) economic transition from an investment- and manufacturing-led growth to a consumption- and services-driven economy.

For the last few years, the world has been in the midst of a major demographic transition, which has affected the world economy. The aging population is one of the most visible global trends

Liquidity hasn’t really deteriorated in some of the major segments of the bond market. Other direct liquidity measures suggest sufficient liquidity in the system.

One of the most prominent effects of technology is on the asset side of the balance sheet. Many technologies drive companies to employ fewer assets in order to generate higher returns.

Labor productivity is an important tool to measure the strength of a country’s economy. Policymakers often use this indicator to compare output efficiency during a particular period.

The mystery of waning labor productivity in various developed economies is still unsettled. However, various economic literature offers plausible explanations.

In recent years, labor productivity growth has slowed down significantly in most of the OECD countries. This decline is broadly spread across sectors.

While global growth is slowing down, the Indian economy seems to be chugging along.

Markets are likely to remain volatile for the rest of the year and beyond. Uncertainty about the rate hike could add to this volatility.

While I don’t have a crystal ball, here are three things I believe all investors need to know about returns in 2016.

Last year wasn’t a great one for investors seeking solid returns. With 2016 off to a rocky start, will we see more of the same this year?

During the last few years, return dispersions within asset classes have been dramatic.

The problem for the Fed is that the 5.1% unemployment rate has reached what many economists feel is full employment.

While the CPI is a measure of inflation in consumer prices, the ECI gives an indication of whether employment costs are rising or falling by measuring inflation in wages.

While the Japanese and the European economies seem to be improving, the US economy still seems to be in a better position than the rest.

The US economy is in decent shape. Low interest rates have been a boon for most families. Home affordability is close to a multi-decade high.

There are no free lunches. The risks involved in fixed income investing are two-fold.

Corporate bonds, especially high yield corporate bonds, correlate to equities and hence, so they don’t provide great diversification benefits.

Higher equity volatility will support bonds going forward. This year, so far, the VIX has been generally higher than last year.

The slide in the unemployment rate is partly due to the workers getting discouraged, that is, getting out of the labor force.