Risk assets have bounced back this year after a dreadful finish in 2018, with a big assist from the US central bank. But are markets overlooking the potential for problems down the road?
Countries and companies have been on a borrowing binge even as the growth of the working-age population in many parts of the world slows. Is a prolonged period of low growth and low inflation in our future?
The past year was a rough ride for bond investors. Will 2019 deliver more of the same?
Crowded trades have become all too common in fixed-income markets. But running with the crowd is risky, particularly when it comes to illiquid assets like bank loans that may not be easy to sell during a market downturn.
Investors tend to think of floating-rate bank loans as the cure for rising interest rates. But our research suggests that a rising-rate environment has historically been the worst time to buy loans.
From steel to engines to whole cars, tariffs are shifting the playing field for automakers. Our credit analysis suggests there are no winners in this war: consumers should expect higher sticker prices, companies lower earnings and investors more volatility.
We answer some of today’s most pressing investor questions—from the effect of trade wars with China to our expectations for rising rates and a correction in high yield.
Volatility in yields got you down? Fearful of more rising rates ahead? Worried your bond portfolio will sink into the red? We have strategies that will help keep you dry, even if the waves get high.
Bond investors are worried about rising rates in today’s environment. Many are protecting themselves by moving to cash or other very short investments. But is their “safe” choice putting them at risk?
Investing 101 tells us that rising interest rates are bad for a bond portfolio. But if you’ve got a long investment horizon, that isn’t necessarily so. We think investors should be more concerned about the end of the credit cycle than rising rates.
What should bond investors do when rates are rising and the credit cycle is ending? Perhaps not what you would expect. But getting this right can be critical for the health of your fixed-income allocation.
It’s human nature to want to protect your portfolio when the market takes a sharp turn. But too often, bond investors make the wrong choices when interest rates rise and credit cycles end. This can have disastrous consequences for returns.
The US corporate credit cycle is nearing its end, and the cycle in parts of Europe isn’t far behind. This can create treacherous conditions for unprepared investors. The first line of defense, in our view, is knowing what to expect.
Is the end of quantitative easing (QE) a big deal? Might tax reform provide an added boost to the US economy? Should investors brace for more volatility in 2018? Yes, yes and yes.
2017 was supposed to be the year that would put an end to modest growth, lukewarm inflation and anemic bond yields. It didn’t live up to the hype. But pressures are building, and that means volatility ahead—as well as opportunity.
At 10 years and counting, the US credit cycle appears to be nearing an end. Could a sweeping rewrite of the tax code keep it alive a little longer? Maybe.
After a relatively quiet third quarter, bond markets are ripe for some volatility and bigger waves as major central banks begin to unwind quantitative easing. For global bond investors, that could lead to new opportunities. But for now, with valuations in many sectors stretched, it pays to be selective.
Today’s low bond market volatility won’t last forever. But knowing whether a correction will come next week or next year isn’t so important. Having an efficient trading strategy that can execute in both tranquil and turbulent markets is.
Preparing for a stock market correction? We’ve got another thing to add to your to-do list: take a look at your fixed-income holdings, too.
Investors who want to reduce risk and maintain a steady income might consider a barbell strategy that pairs interest rate–sensitive bonds with high-yielding credit assets. But first, it’s important to strike the right balance.
One of the biggest challenges for bond investors today is keeping income flowing without taking too much risk. We think a balanced barbell approach can help.
Rising interest rates. Stretched valuations. Populist politics. These are some of the challenges bond investors face today. They’re also reminders of why it’s so important to manage interest-rate and credit risk in an integrated way.
Rising interest rates make bond investors nervous. But purging your portfolio of interest-rate risk can backfire—even in a rising-rate environment. There’s a better way to balance risk and return.
Driverless cars may be the wave of the future. But when it comes to bond investing, it’s best to keep your hands on the wheel. Anything less could do serious damage to your fixed-income portfolio.
Investors often ask us which of the two primary bond market risks—interest rate or credit—they should focus on in 2017. Our answer? Both of them—and the interaction between the two.