Rate Reset May Fuel A New Bond Bull Market
PGIM Fixed Income Co-Chief Investment Officer Greg Peters shares his outlook for why he believes we’re in the early innings of a new bond bull market.
While the pace of inflation is slowing, persistently strong U.S. wage growth and elevated prices in Europe could keep inflation uncomfortably high for some time. Meanwhile, the recent bout of financial instability is leading stock and bond markets to increasingly pricing in a recession. A slowing economy and receding inflation may help the U.S. Federal Reserve to end its tightening for the cycle or at least pause it for a few months. Against this evolving backdrop, PGIM asset managers provide insights on key trends set to shape the second half of 2023 and beyond, and offer ideas for investors seeking to seize the opportunities ahead.
PGIM Fixed Income Co-Chief Investment Officer Greg Peters shares his outlook for why he believes we’re in the early innings of a new bond bull market.
PGIM Fixed Income Senior Portfolio Manager Michael Collins, CFA, shares how fixed income investors can sequence the economic cycle with opportunities for alpha.
Jennison Associates Head of Global Equities Mark Baribeau, CFA, shares secular growth themes poised to outperform as economic growth slows.
PGIM Real Estate’s Rick Romano, CFA explains why REITs may offer a compelling entry point and strong upside potential as rate hikes stabilize.
Head of PGIM Custom Harvest, Robert Holderith, shares how tax-loss harvesting can help drive long-term wealth management success throughout market cycles.
PGIM Wadhwani’s Dr. Sushil Wadhwani, CBE, discusses why agile global macro strategies are attractive portfolio diversifiers for rising recession risks.
Risks—Investing involves risks. Some investments are riskier than others. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost. Fixed income investments are subject to interest rate risk, and their value will decline as interest rates rise. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, and political and economic uncertainties. Investing in emerging markets is very risky due to the additional political, economic, and currency risks associated with these underdeveloped geographic areas. Investments in growth stocks may be especially volatile. Value investing involves the risk that undervalued securities may not appreciate as anticipated. It may take a substantial period of time to realize a gain on an investment in a small or midsized company, if any gain is realized at all. Real estate investment trusts (REITs) may not be suitable for all investors. There is no guarantee a REIT will pay distributions given the inherent risks associated with the market. A REIT may fail to qualify as a REIT as defined in the Tax Code, which could affect operations and negatively impact the ability to make distributions. There is no guarantee a REIT’s investment objectives will be achieved. Diversification and asset allocation do not guarantee profit or protect against loss. Investments in in Master Limited Partnerships (MLP) and MLP-related investments are subject to complicated and in some cases unsettled accounting, tax, and valuation issues, as well as risks related to limited control and limited rights to vote, potential conflicts of interest, cash flow, dilution, and limited liquidity and risks related to the general partner’s right to force sales at undesirable times or prices. MLPs are also subject to risks relating to their complex tax structure, including losing its tax status as a partnership, resulting in a reduction in the value of the MLP investment. Many MLP investments are in the energy sector and subject to a greater degree to risk of loss as a result of adverse economic, business, regulatory, environmental, or other developments affecting industries within that sector than investments more diversified across different industries. Diversification and asset allocation do not guarantee profit or protect against loss.
The views expressed herein are those of investment professionals at PGIM Fixed Income, Jennison Associates LLC (“Jennison”), PGIM Quantitative Solutions, PGIM Real Estate, PGIM Custom Harvest, and PGIM Investments at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. This commentary is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services. This commentary does not constitute investment advice and should not be used as the basis for any investment decision. This commentary does not purport to provide any legal, tax, or accounting advice. PGIM Investments LLC is a registered investment advisor with the U.S. Securities and Exchange Commission. PGIM Fixed Income, Jennison Associates, PGIM Quantitative Solutions, PGIM Wadhwani, PGIM Real Estate, PGIM Custom Harvest, and PGIM Investments do not provide tax, legal, or accounting advice. This material is for information purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
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