/institutional/perspectives/portfolio-strategy/fixed-income-outlook-second-quarter

Managing Through a Persistent State of Heightened Volatility

In the second-quarter 2016 report, our fixed-income team discusses where we’re finding relative value amid market volatility.

May 24, 2016


Report Highlights

  • We expect the heightened first quarter volatility will continue into the summer. This will create opportunities to allocate to positions overly discounted due to unwarranted fears of recession or financial crisis.
  • Macroeconomic factors, such as solid but unspectacular economic growth, a cautious Fed, and improving oil market supply/demand fundamentals, underpin our generally positive outlook for U.S. credit.
  • A stabilized oil market should support credit performance of issuers in the energy sector. Our outlook applies primarily to the investment-grade corporate bond market, but it should also support select high-yield issuers as well.
  • Structured credit continues to have a significant weighting in our strategies based on our relative value analysis across fixed-income markets.
  • We expect the Fed to raise rates once in 2016. In our view, policymakers will be watching Chinese growth, the “Brexit” vote in June, and the U.S. presidential election in November.
  • Our investment process, which is designed to avoid cognitive biases, snap judgments, and other decision-making pitfalls, provides a foundation for disciplined, systematic, and repeatable investment results that does not rely on one key individual or group.
 
 
 

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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, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.