/perspectives/portfolio-strategy/q3-2018-fixed-income-outlook

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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FEATURED PERSPECTIVES

March 07, 2019

Late-Cycle Drama Is Unfolding

Risk assets will likely enjoy another rally while the Fed stays on hold, but the pause will only allow excesses to become more pronounced.

January 24, 2019

Amber Lights Flash at Davos

Should the mood this year at Davos prove once again to be a contra-indicator, this may be the signal that the economy is likely to re-accelerate soon and that the party in risk assets continues.

January 18, 2019

Up the Escalator, Down the Elevator

An uptick in corporate defaults in 2019 will mark the beginning of a prolonged period of stress in the corporate bond market.


VIDEO

First Quarter 2019 Fixed-Income Outlook 

First Quarter 2019 Fixed-Income Outlook

Portfolio Manager Adam Bloch and Macroeconomic and Investment Research Group Director Matt Bush share insights from the first quarter 2019 Fixed-Income Outlook.

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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