Rebounding from the pandemic

Equities are increasingly sensitive to interest rates, while the duration of traditional fixed income assets has rarely been higher. A change in the yield curve would have significant implications for equity market leadership and risks for fixed income. Record twin deficits — trade and fiscal — will weigh on the position of a weakening U.S. dollar with international and emerging markets standing to benefit. Even a healthy return of inflation could cause woes for investors who will need to manage to shorten duration or pivot their equity exposure.

With greater dispersion in rates across global economies given the uneven reopening, investors may look to areas of the market, like senior secured loans, which have historically been less — or not at all — sensitive to changes in interest rates. The next 10 years may not look like the past 10, which were beta-driven and U.S.-centric. Therefore, a one-stop global allocation strategy that looks across the globe to find the best return opportunities wherever they exist. 

Zooming in on inflation

Q3 is shaping up to be a collision course of the economy, policy and markets, and data watching will become a full-time sport.

Economy going at the speed of light—what could go wrong?

What does the future hold for this rapidly paced market?

As long rates fall, core fixed income stuck in the middle

This chart looks at the declining yield curve and why core FI is in a tough spot.

Will growth continue?

With the recent changes in Washington, investors may expect government support and widespread vaccination to provide a robust economic recovery with rising rates, higher inflation and higher GDP growth. Such a tailwind may offer active managers the opportunity to flex their alpha muscles by uncovering opportunities in an uneven global reopening or amid a more sustained change in market leadership.

We expect greater dispersion in rates across global economies given the uneven reopening. A one-stop global allocation strategy allows the team to go across the globe to find the best return opportunities wherever they exist. Lastly, investors may look to areas of the market, like senior secured loans, which have historically been less — or not at all­ —sensitive to changes in interest rates given their status as short-duration, floating rate assets.

Small talk: The case for SMIDs

We dig into the historical outperformance of small and mid-cap stocks and the attributes that make them uniquely well-positioned for today’s investing challenges.

Assessing a new starting point

Against an exceptionally optimistic economic outlook, we analyze previous cycles to understand what may come next for stocks.

Equity markets and the global reflation trade

What reflation is, how it has historically been manifested, and what it means for today’s equity markets.

Fixing your fixed income

As short-term rates remain anchored to Fed policy, the search for yield continues for income-starved investors while credit spreads retesting pre-COVID lows may become a reality. Given the low starting point of fixed income yields today, bonds have significantly more risk to the downside if rates rise compared to the limited degree of upside should rates fall. Lower-duration assets may offer shelter.

In order to address what low yields have broken, investors must rethink their approach to building portfolios— and fix their fixed income. With current low yields and historically high duration of traditional fixed income, floating rate assets with high current income backed by the value of properties (i.e., hard assets) may be a good place to put investor capital.

Fix your fixed income

In order to address what low yields have broken, investors must rethink their approach to building portfolios—and fix their fixed income.

The traditional “40” is broken

Traditional bonds are providing little yield with more interest rate risk than ever. Our chart looks at the asymmetrical risk-return outlook.

Fixed income webinar

Listen as we discuss the low-rate environment, the search for yield and the changing role of core fixed income.