/perspectives/portfolio-strategy/fixed-income-outlook-finding-relative-value-with

Finding Relative Value with One Eye on Global Central Banks 

Our third quarter 2016 report, details our current fixed-income strategy, economic outlook and where we see relative value.

August 17, 2016


Report Highlights

After the Brexit vote surprised the many market participants who had positioned themselves for the opposite outcome, the market panicked. Market stability—and then a rally—only arrived once central banks promised liquidity support. Looking ahead, it is likely that we will experience further volatility before the year is out. The situation in Europe and Japan is reaching a tipping point as policymakers decide whether to stand pat and wait for incoming data, or take more action as conditions worsen. Their decisions (and the Fed’s) carry significant investment implications.

Find out where our fixed-income investment team is finding relative value in a world of low and negative rates and uncertain monetary policy.

  • Our Macroeconomic Research team expects solid near-term growth in U.S. underpinned by strength in the consumer sector, but the Fed likely will remain on hold until December 2016.
  • Slow and steady economic growth, a cautious Fed, low interest rates, and improving oil market supply-demand fundamentals have created a favorable environment for fixed-income markets.
  • The global macroeconomic backdrop, and the central banks’ willingness to continue their accommodative policies, should support risk assets going forward.
  • Our oil price model calls for seasonal weakness in the second half of 2016 before prices rise to $55 by mid-2017.
  • We see value in energy and basic materials credits, as well as technology and media companies.
  • In securitized products, we continue to find value in new-issue aircraft lease transactions, and in collateralized loan obligations backed by loans to middle market companies.
 

FEATURED PERSPECTIVES

July 29, 2019

The Fed's Sugar High

Rational immigration policy, not rate cuts, is the way to avoid recession.

July 17, 2019

High-Yield Credit in a Fed Easing Cycle

High-yield corporate bond spreads and bank loan discount margins typically widen when the Fed is lowering interest rates.

June 17, 2019

Managing While Risk Premia Shrink

The Federal Reserve’s policy pivot has supported a rally in most credit sectors, but investors should worry about late cycle excesses.


VIDEO

Second Quarter 2019 Fixed-Income Outlook 

Second Quarter 2019 Fixed-Income Outlook

Portfolio Manager Steve Brown and Brian Smedley, Head of the Macroeconomic and Investment Research Group, explain that while the Federal Reserve's pause in policy has supported a rally in most credit sectors, investors should worry about excesses continuing to build this late in the cycle.

Core Fixed-Income Conundrum 

Solving the Core Conundrum

Anne Walsh, Chief Investment Officer for Fixed Income, shares insights on the fixed-income market and explains the Guggenheim approach to solving the Core Conundrum.







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