/perspectives/sector-views/q1-2023-fixed-income-sector-views

First Quarter 2023 Fixed-Income Sector Views

Valuations have reset after a volatile year.

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February 22, 2023

Fixed-Income Sector Views

First Quarter 2023

The emerging theme from our Sector Teams in this edition of Fixed Income Sector Views is that the market has come around to the view that the Federal Reserve’s (Fed) hiking cycle is nearing its end. This is an important and bullish transition in investor psychology and has led asset allocators to rethink their exposure to fixed income. The subsequent recovery in credit has been disproportionate and led to some dispersion among sectors. This presents a compelling opportunity for some opportunistic repositioning. Most attractive to us are the dislocations in higher quality structured credit, where spreads remain historically wide relative to corporate credit. In addition, significantly discounted dollar prices offer attractive convexity and total return potential. While future Fed policy is uncertain and the risk of recession is rising, fixed income can again add both income and correlation benefits to a diversified portfolio.

Sector-Specific Outlooks In This Report

Important Notices and Disclosures

One basis point is equal to 0.01 percent.

Investments in fixed-income instruments are subject to the possibility that interest rates could rise, causing their values to decline. High yield and unrated debt securities are at a greater risk of default than investment grade bonds and may be less liquid, which may increase volatility. Investors in asset-backed securities, including collateralized loan obligations (“CLOs”), generally receive payments that are part interest and part return of principal. These payments may vary based on the rate loans are repaid. Some asset-backed securities may have structures that make their reaction to interest rates and other factors difficult to predict, making their prices volatile and they are subject to liquidity and valuation risk. CLOs bear similar risks to investing in loans directly, such as credit, interest rate, counterparty, prepayment, liquidity, and valuation risks. Loans are often below investment grade, may be unrated, and typically offer a fixed or floating interest rate.

This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.

This material contains opinions of the author or speaker, but not necessarily those of Guggenheim Partners or its subsidiaries. The opinions contained herein are subject to change without notice. Forward-looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. Past performance is not indicative of future results.

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FEATURED PERSPECTIVES

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The Fed’s next move and beyond.

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February 15, 2023

Investors Should Not Expect Much Relief from Volatility

The transition to a world of quantitative tightening will lead to reduced liquidity, capital rationing and persistent swings in asset prices.

VIDEOS AND PODCASTS

2022’s Upside: The Fed Has Put the Income Back in Fixed Income 

2022’s Upside: The Fed Has Put the Income Back in Fixed Income

Anne Walsh, Chief Investment Officer for Fixed Income at Guggenheim Investments, joined Asset TV to discuss macroeconomic conditions, risk, and relative value in the bond market.

Macro Markets Podcast 

Macro Markets Podcast Episode 31: Post-FOMC/SVB Analysis

Matt Bush, Guggenheim Investments U.S. Economist, and Evan Serdensky, a Portfolio Manager on our Total Return team, share their perspectives and outlook following two eventful weeks in markets and the economy. They discuss the future path of monetary policy, the effects of a possible credit crunch, and investment strategy and positioning.




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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 Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.

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