Schroders global investment global unconstrained fixed income investment team pointed out that despite the fading concerns of a winter economic recession in the current financial markets, investors must remain cautious of potential risks in the summer. In terms of asset allocation, they continue to favor high-quality credit, including securitized credit, mortgage bonds, and agency mortgage-backed securities. Compared to many corporate credit bonds, the valuations in these areas are relatively attractive. Schroders global investment indicated that in the past month, the possibility of a winter economic recession continued to decrease. However, the strong and unexpected performance of the U.S. economy has increased the risk of a non-landing scenario. Currently, a soft landing scenario remains the team's basic forecast. Although the team has evaluated various situations in which various scenarios may occur globally, by the beginning of 2024, there has been a visible economic recovery momentum worldwide. Despite potential concerns in the U.S. banking sector, the strong U.S. economic growth has led the team to lower the probability of a hard landing while raising the possibility of a non-landing scenario. Although this has not changed the team's basic forecast of a soft economic landing, the team has reduced the probability of this scenario. Moderate economic growth, low inflation, and low interest rates remain the team's main forecast, but some complex factors are gradually emerging. The team is making efforts to avoid overanalyzing monthly data, especially those from the beginning of 2024, where seasonal adjustments may affect the overall economic situation. However, signs indicate that the lukewarm economic soft landing view is facing increasing challenges. These challenges mainly come from the U.S. labor market, where recent economic data has rebounded, with some industries showing rapid growth, supporting household consumption. If economic growth maintains its current pace, the risk of a tightening labor market may rise. Schroders global investment stated that in recent months, the team has emphasized that as the trend of slowing commodity inflation has largely ended, responsibility for further easing inflation pressures has shifted to the service industry. Although the real estate industry is in a position to provide assistance, in the backdrop of a global economic recovery, the potential limits to other mitigated price increases related to the service industry alongside other inflation factors in the basket. In the past few weeks, investors have gradually accepted that controlling inflation at target levels will be a slow process, and global central banks need more evidence to formulate monetary policy to ensure that economic progress meets their expectations. This conveys to investors that they should not get too excited about recent monetary easing policies. In the past six months, the easing of financial conditions has provided more support for economic growth prospects. In some way, this has begun to a turnaround in global manufacturing. Although this is the case, the possibility of an economic recession cannot be completely ruled out. The challenges faced by New York Community Bank and the overall U.S. banking sector remind people that after the Federal Reserve reaches the final interest rate after a long period, a tightening cycle could still have unexpected consequences. However, as of now, the probability of an economic hard landing continues to decrease. Schroders global investment said that in the past month, the team has further adjusted their slightly bullish stance on the duration. Currently, with the yield curve becoming steeper (long-term bonds underperforming short-term bonds), more direct duration trades are more attractive. In terms of asset allocation, they continue to favor high-quality credit, including securitized credit, mortgage bonds, and agency mortgage-backed securities. Compared to many corporate credit bonds, the valuations in these areas are relatively attractive. In terms of investment-grade credit, the U.S. market's valuations are unattractive, preferring European investment-grade credit as this asset class still holds some value. Overall, they are bearish on high-yield bonds. In terms of currency, the team has shifted to a more bullish outlook on the U.S. dollar. The potential drag on the dollar due to the yet to be fully realized global manufacturing recovery may happen. However, the current movement of U.S. bond yields has a significant impact on the dollar's trend, and if U.S. bond yields rise, it is likely to benefit the dollar.