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Fixed Income

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A Bounce Off The Floor

US Treasury yields bounced after this morning’s employment report. We offer our updated views about how long the recent trading range will hold.

US Bond Strategy by Ryan Swift
Mexican Election: Local Bonds Offer Great Value
According to BCA Research’s Geopolitical Strategy service, Mexican politics will remain stable and overall supportive for markets. Sheinbaum is a credible policymaker and technocrat whose rhetoric is not as ideological or divisive as her predecessor’s. …
Daily Insights
The BoC Dove Takes Flight
The Bank of Canada reduced its policy rate by 25 basis points from 5% to 4.75% on Wednesday, in line with the market consensus. Headline inflation and the BoC’s preferred measures of core inflation are within the BoC’s target range of 1-3%, and shorter-term…
Daily Insights
MBS Spreads Have Room To Tighten
According to BCA Research’s US Bond Strategy service, Mortgage-Backed Securities are currently priced below fair value. Mortgage-Backed Securities outperformed the duration-equivalent Treasury index by 49 basis points in May, bringing year-to-date excess…
Daily Insights
High-Yield Downgrades Foreshadow Broader Deterioration
Corporate and junk bonds are the fixed-income sectors that are most exposed to an economic downturn. We’ve highlighted that markets continue to price in a Goldilocks scenario, with spreads narrowing despite ongoing deterioration in the labor market. Spreads…
Daily Insights
Recession Is Still On The Horizon
According to BCA Research’s Global Asset Allocation service, the economy has been in the “Overheating” phase of the cycle for a while, with signs of slowing growth but also stubbornly high inflation. The most likely next phase is “Recession,” though the…
Daily Insights
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Mexican Elections: Macro And Market Repercussions

MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.

Geopolitical Strategy, Emerging Markets Strategy by Max Malakhveitchouk, Juan Egana
May In Review
The risk-on soft-landing narrative dominated markets in May, with both equities and bonds rallying throughout the month. Meanwhile, the counter-cyclical US dollar slumped, and the cyclical euro appreciated against the greenback. Regionally, US assets…
Daily Insights
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Looking For Two Cuts This Year

Our Portfolio Allocation Summary for June 2024.

US Bond Strategy by Ryan Swift
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Monthly Portfolio Update: When Strong Growth Is Not Good News

The US economy is in the “Overheating” phase, so stronger growth brings higher inflation. Tight monetary policy means recession is still likely over the next 12 months. Stay defensive.

Global Asset Allocation by Garry Evans

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