A blowout in the U.K. government's borrowing plans is going to push down returns on U.K. gilts in 2003 - and corporate paper isn't going to be much better, said Ian Fishwick.
"I can see them borrowing another L10 billion" on top of the planned L20 billion, he said.
Then corporate bonds, with spreads already very tight, are overvalued, he added. "The earnings situation doesn't support (corporate bond returns) at all in Europe. But the situation is better in the U.S.; there's greater depth there."
But he's more optimistic on the prospects for an overall economic recovery.
Mr. Fishwick thinks that expansionary fiscal policy in Europe, especially the U.K., where the government has ambitious health spending plans, will push the U.K.'s GDP growth rate to a modest 1.8% - lower than other predictions, but a gain in anyone's book.
"It's going to be a very slow, grinding, very modest recovery."
That's partly because of the offsetting effect of a bearish corporate sector that's cautious about making serious capital expenditure commitments.
Mr. Fishwick's predictions for euroland as a whole were less rosy - 1.3% - offset mainly by Germany's structural problems.
He predicted the Federal Reserve will tighten "moderately" - to not much more than 1.5% - from 1.25% now, "assuming the U.S. doesn't go back into recession."
"I expect to see small interest rate rises in the U.K. and the U.S. The U.K. is pretty much similar to the situation in the U.S., although the interest rates are higher here. You have similar housing stories and rates of consumer spending. But in Europe, they are still on the easing cycle."
Most of the problems in the euro countries could be attributed to Germany, the biggest, most dominant European Union member.
The problems are well documented: much-needed labor market reforms; banks with bad loan books; and competition from cheaper, more flexible rivals in Eastern Europe and Asia.
Needless to say, inflation won't be a major concern. He's anticipating around 2% for the year in the U.S. and U.K., but lower in euroland.
"But deflation is potentially a problem everywhere, and in euroland, where inflation is very low, you can imagine individual jurisdictions that are very, very low or even negative. I think Germany is ripe for that at the moment," he said.
Head of U.K. fixed income
Credit Suisse Asset Management, London
Assets under management: L180 billion ($282 billion)
U.K. GDP: 1.8%
E.U. GDP: 1.3%
10-year gilt: 2% to 3%