Company: FCO
Filing Date: 2025-01-10
Form Type: N-CSR
Source: 0001104659-25-002474
Chunk: 5

Company: ABRDN GLOBAL INCOME FUND, INC.
Filing Date: 2025-01-10
Form: N-CSR
Chunk 5
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-end, and subsequent to that, the emergence of Donald Trump as the winner of the election caused the market to pivot towards pricing the impact of policies that support the U.S. dollar, steeper yield curves, and credit fundamentals. The 10-year U.S. Treasury yield ended the fiscal year 45 basis points (bps) lower than it was to begin the period at 4.28%. The two-year yield fell by 77bps to 4.17%. Although still inverted at the short end, the Treasury yield curve is taking on a more ‘normal’ upward slope beyond five-year maturities. 1The 10-year yield rallied strongly in the first and third quarters of the period in anticipation of the start of the Fed easing cycle. The 10-year yield sold off aggressively from mid-September in reaction to strong labor market, inflation, and manufacturing activity data. Moreover, pricing was impacted by speculation around the policy priorities of a second Trump administration and whether this will lead to looser fiscal policy and higher inflation. These risk premia are being priced into the longer end of the yield curve. The market had to wait quite a while for the much-anticipated pivot in U.S. monetary policy being realized. The last mile of the inflation challenge was more stubborn than anticipated. After holding rates at their highs since July 2023, the Fed delivered a larger-than-expected 50bps cut in September 2024 and cut rates by a further 25bps shortly after period-end. Fed Chair Jerome Powell downplayed the risks of a recession and said that easing was to preserve and support the ‘soft landing’. He emphasized that future actions would be data dependent. By period-end, fed fund futures 2suggested 45bps of rate cuts by December 2024, down from earlier suggestions of 50bps. Consumer price inflation remained stubbornly above 3% (against a Fed target of 2%) until July 2024, after which it fell to 2.4% in September but rebounded to 2.6% in October. Notwithstanding fears of a cooling labor market over the summer period, more recent evidence points to ongoing resilience. Asian local-currency government bonds delivered positive returns over the fiscal year as 10-year yields fell across the region, in most cases outperforming the corresponding U.S. Treasury bonds. Central banks in Asia eased policy over the period. The Bank of Korea cut its policy rate by 25bps as inflation fell below target for the first time since March