European mortgage-backed bonds are cheap even though Eurozone economies are stalling, said Tracy Chen, portfolio manager for the Legg Mason Brandywine Alternative Credit Fund. Chen added that she is bearish on the sagging Euro because she expects the ECB to be more aggressive. She said she also expects the Japanese Yen to weaken as the government seeks greater success in fighting deflation and wage growth fails to increase real consumer spending. Chen is more positive on Chinese bonds, saying the government is reform-minded and supporting growth. Finally, Chen is bullish on domestic mortgage-backed bonds despite slow growth in the U.S. economy.