August 16, 2017
Stock market indexes keep making new highs, credit performance has been strong, and credit spreads keep getting tighter. At the same time, volatility plumbs record lows and central bank policies continue to obscure free market price discovery. In the new edition of our Fixed-Income Outlook, our investment management team explains why a defensive posture is a prudent course of action, and discusses shorter-term, sector-specific tactics to position our portfolios to weather the looming correction. In particular, we believe credit risk assets are particularly at risk of a correction, so we have continued to reduce our exposure to that sector. Our high-yield corporate bond allocation across our Core and Multi-Credit strategies is now at the lowest level since their inception, and we have reduced our positions in lower-rated bank loans and CLO debt.
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FEATURED PERSPECTIVES
After several quarters of low volatility, tight spreads, and abundant liquidity, financial conditions are shifting.
New developments in fiscal policy, the labor market, and the neutral interest rate suggest that the expansion could extend into the latter half of our recession range.
A framework for transitioning sustainable investing to an institutional asset class.
VIDEO
Global CIO Scott Minerd and Head of Macroeconomic and Investment Research Brian Smedley provide context and commentary to complement our recent publication, “Forecasting the Next Recession.”
In his market outlook, Global CIO Scott Minerd discusses the challenges of managing in a market melt up and highlights several charts from his recent piece, “10 Macro Themes to Watch in 2018.”
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