We expect interest rates will increase in many developed markets, as implied by market pricing. But we think the Fed will hold rates in restrictive territory for longer than expected. We don’t believe any increases will prompt another European sovereign debt crisis. US Federal Reserve Pauses, but Does Not Pivot in 2023 Celia Dallas, Chief […]
December 2022
With inflation running at multi-decade highs, monetary policymakers are united in one of the most aggressive tightening campaigns in decades. Most central banks have already significantly increased policy rates this year, and some are unwinding their massive balance sheets, also known as quantitative tightening (QT). From what we know about QT, we expect it to […]
November 2022
Yes. Munis still have value on an after-tax basis over the long term, and their near-term outlook has improved following the rise in yields and spreads during this year’s sell-off. Still, the economic and policy backdrop remains challenging. Thus, we believe it is reasonable for most taxable investors to hold a reduced portion of their […]
August 2022
No, as the risk/reward remains uncompelling and spreads may widen further if a recession ensues. However, the sell-off has enhanced our enthusiasm for collateralized loan obligation (CLO) debt, which offers attractive pricing, solid fundamentals, and lower interest rate sensitivity than most other credit investments. Prices for most credit assets have declined in 2022, as have […]
July 2022
Credit assets have sold off in recent weeks in unison with other risk assets, as market concern has shifted from one extreme of growth and inflation running too hot to another of stagflation, or even outright recession. Despite the improvement in credit pricing, we believe investors should be patient when adding to high-beta credit portfolios. […]
May 2022
Long-dated government bond yields rose in 2021 on strong economic growth and surging inflation. Central banks have maintained their easy money policies despite the rapid recovery in economic conditions, likely keeping yields lower than they would have been otherwise. This may soon change now that several major central banks are starting the process of dialing back support.
December 2021
In this paper, we analyze the drivers behind the recent rise in yields and compare the current bond sell-off to major bond sell-offs of the past to assess whether the rise in yields can continue and the implications for fixed income.
May 2021
Investors have predominantly relied on developed markets sovereign bonds for defense in balanced portfolios, but low rates have diminished their diversification characteristics.
January 2021