After the markets’ thorough drubbing in the first half, fixed income’s next episode starts with a more balanced picture of elevated interest rates, wider credit spreads, and shorter durations. It’s too soon to sound the all-clear on periods of jarring volatility. Yet, from a long-term perspective, exposure to developed market duration is becoming more compelling after the broad repricing and with the looming moderation in global growth.
The title “Phoenix,” by Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds, implies a rebirth—but that may be jumping ahead. Before he gets to the good part, Tipp first looks at the anatomy of the recent selloff and how the progression through the ashes is likely to play out.
“Recession Risks Ripple Out,” by Katharine Neiss, PhD, European Chief Economist, looks at how central bank responses are rippling through the global economy. While a recession is not certain, it may not take much to bring one on.
Our portfolio managers subsequently indicate how these themes influence the risks and opportunities within their respective sectors.
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