FICC | Bonds

In this report, we present the quarterly review of the Global Fixed Income Strategy Model Bond Portfolio. The portfolio remains positioned for slower global growth momentum over the next 6-12 months, favoring government bonds over corporate debt. The portfolio also favors government bonds in countries flirting with recession where policy rates are too high (core Europe & the UK).

The recent bear-steepening of the US Treasury curve has been driven by the combination of stronger-than-expected economic growth and stable Fed rate expectations. Historically, such periods do not last very long, and we see the current bear-steepening episode ending soon. We also highlight an opportunity in Agency MBS.

Comments on recent Fedspeak, bond market moves and this morning’s CPI report.

An update to our US bond strategy following this morning’s employment report.

We present our Portfolio Allocation Summary for October 2023.

Special Report

After a busy month of global central bank meetings, and rising global bond yields, it is a good time to update our suite of Global Central Bank Monitors to assess the likely next moves from policymakers. The signal from the Monitors in all countries (outside of Japan) is consistent with the “on hold but higher for longer” messaging from major central banks like the Fed and the ECB. Only our Bank of Japan Monitor stands out as clearly signaling the need for tighter monetary policy.

A discussion of today’s FOMC meeting and its investment implications.

Top-down measures of nonfinancial corporate sector balance sheet health have been flattered in recent quarters by inaccurate data on interest expense. After correcting for the inaccurate data, we see that our best measures of corporate balance sheet health show a persistent steady deterioration.

The implications of this morning’s CPI report for Fed policy, Treasuries and TIPS.

In this report, we review our European fixed income strategy recommendations ahead of tomorrow’s critical ECB meeting