Today on the podcast we welcome Portfolio Manager Sri Tella to discuss his outlook on the fixed income market, whether investors should consider adjusting the risk profile of their portfolios, and the extent to which Canada is grappling with the same part of the ongoing inflation story as the United States. On the fixed income side, Sri explains to host Pamela Ritchie that issuance has generally been down in Canada, fuelling the strength of the Canadian market. Strategies like tactical mandates, reduced exposure to the broader market, and placing focus on companies with strong fundamentals all help to balance risk and return. From a growth and economic perspective, Canada looks good to international investors and there continues to be demand for high quality fixed income in markets. Sri describes how demand has shifted into the service sector, as the market for goods has declined post-pandemic, due to higher prices. High savings rates are fuelling consumer spending in both Canada and the United States, with Canada’s inflation coming down to around 4%. Towards the latter half of the year, the Bank of Canada is forecasting a 3% inflation rate, which remains high by historical industry standards. Turning to the debt ceiling, Sri says that investor concern is primarily related to the possibility of short-term volatility in the market. He is confident that a deal will be reached, but whether it will be reached on time remains uncertain.

Recorded on May 24, 2023.

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