As if 2023 wasn’t complicated enough, a banking crisis joined the fray in the first quarter of the year. The compilation of risks, including the dire consequences of the looming U.S. debt ceiling showdown, brings a U.S. recession even closer.
Yet, the fixed income returns in Q1 show that, in an environment of elevated yields, bonds can perform well amidst a challenging backdrop. Looking ahead, the vast dispersions that exist across markets further enhance the return potential from active management.
In "Ready for a Pause?," Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds, explores the factors supporting the opportunities for alpha generation going forward.
Next, Daleep Singh, Chief Global Economist & Head of Global Macroeconomic Research, examines the economic fallout from the failures of SVB and Credit Suisse as indicated in "The Long Tail of the Banking Crisis." The banking turmoil also warrants a recalibration of the balance of macroeconomic risks across the globe.
Our portfolio managers subsequently indicate how these factors—including the governance lessons from Credit Suisse—influence the opportunities within their respective sectors.