Tail Risks Are Getting Fatter - Title Image

Tail Risks Are Getting Fatter

While the U.S. economy remains on solid footing, exogenous risks threaten asset values, market confidence, and the strength of the U.S. economy.

August 20, 2018


Fixed Income Outlook video

Brian Smedley and Adam Bloch share insights from the Third Quarter Fixed-Income Outlook


Fixed-Income Outlook

Third Quarter 2018

Here are the key takeaways from our latest Fixed-Income Outlook report:

  • General investor confusion prevails as the mid-2018 market theme. Investment-grade corporate bond spreads are wider while high-yield corporate bond spreads are tighter since 2017.
  • While the U.S. economy remains on solid footing, tail risks are getting fatter.
  • These risks include the possibility of an inflationary trade war, increasingly restrictive Federal Reserve policy, a potential fall budget showdown, instability in Europe and emerging markets, saber-rattling with Iran, and the consequences of the midterm elections.
  • The markets have reflected this uncertainty, evidenced by spasms of volatility and repricing in credit markets.
  • The situation calls for a duration barbell, a move up in credit.
 
 
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VIDEOS & PODCASTS

Market Outlook 

Recession ‘Inevitable’ as the Fed Fights Inflation

Scott Minerd, Chairman of Investments and Guggenheim Partners Global CIO, joins Bloomberg TV on Fed Day to discuss the Federal Reserve’s largest rate hike since 1994.

Macro Markets Podcast 

Macro Markets Podcast Episode 18: Investment-Grade Corporates and the Macro Backdrop

Managing Director Justin Takata discusses the technical and fundamental drivers of value in investment grade corporates, and U.S. Economist Matt Bush addresses recession timing and the possible progression of policy.