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Fixed-Income Outlook: Risk and Relative Value in a Time of Change

In our fourth quarter 2016 report, investment team leaders discuss market conditions heading into a new administration and likely Fed rate hikes.

December 14, 2016


Report Highlights

The surprise end to the fractious U.S. election season leaves many questions unanswered, but we remain alert to the possible impact of resurgent fiscal policy. Several market positives should support asset performance into 2017. The domestic economy just turned in the highest growth rate in two years, early indications point to a strong Christmas selling season, corporate earnings are turning higher or recovering, and the energy sector is stabilizing with the oil market recovery. An investor’s best option in an environment like this is to sell into strength and buy on weakness.

  • We believe it is highly likely the Fed will raise rates three, and possibly four, times in 2017.
  • A tightening labor market, rising inflation, and a new administration suggest higher economic growth and inflation, upward pressure on rates, and Fed rate hikes.
  • We continue to see strong demand from foreign investors hungry for yield supporting the investment-grade market.
  • Spreads on collateralized loan obligations have tightened significantly, particularly as investors have been allocating more to floating rate assets.
  • Rising pension liabilities remain a concern, but strong technicals support the municipal market.
 
 

FEATURED PERSPECTIVES

February 15, 2017

Fixed-Income Outlook: Assessing Value in a Faith-Based Rally

Our first quarter 2017 report reflects expectations for strong risk-asset performance as President Trump’s economic agenda takes shape.

January 23, 2017

10 Macro Themes to Watch in 2017

Ten charts illustrate the global macroeconomic trends most likely to shape the investment environment in 2017 and beyond.

January 13, 2017

High-Yield and Bank Loan Outlook: Focus on Floating Rate

Conditions bode well for credit, but a more aggressive Fed and geopolitics could bring volatility. 


VIDEO

Long-Term Macroeconomic Outlook 

Our Long-Term Macroeconomic Outlook

Scott Minerd, Global Chief Investment Officer, sheds light on U.S. economic strength, headwinds for the EU, and which emerging markets look attractive for long-term investors.

Strategies for a Low-Yield Environment 

Strategies for a Low-Yield Environment

Scott Minerd, Global Chief Investment Officer, and Anne Walsh, Assistant Chief Investment Officer, Fixed Income, share insights on investing in unprecedented market conditions.



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Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.