The Weekly Fix

The time has come. With inflation under control, Jerome Powell signaled rate cuts are on the way, leading to markets rallying. The question now turns to how much and when. Eric Hathaway, Senior Portfolio Manager on the BlueBay U.S. Fixed Income Team, examines this question and the Fed’s new enemy: the labor market.

Tim Leary, Senior Portfolio Manager on the BlueBay U.S. Fixed Income Team, discusses how the high yield bond market has returned to its previous levels after the recent volatility.

Stephen Fitzsimmons, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income Team, examines how the market recovered from an extremely volatile week and shares how we took advantage of that volatility to readjust our portfolios before markets calmed down.

Everyone. Remain. Calm. Andrzej Skiba, Head of BlueBay U.S. Fixed Income, discusses why the market may be overreacting to the most recent labor market data in this episode of The Weekly Fix.

In today's Weekly Fix, Stephen Fitzsimmons, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income Team, discusses our expectations around the upcoming FOMC meeting, highlighting rate cut likelihood, and shares our observances around recent market activity.

Tim Leary, Senior Portfolio Manager on the BlueBay U.S. Fixed Income Team, tunes out the political noise and focuses on the future of the market in this episode of The Weekly Fix.

In this episode of The Weekly Fix, Stephen Fitzsimmons, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income Team, discusses what the recent inflation measures and the attack on former President Trump mean for markets.

In this episode of The Weekly Fix, Stephen Fitzsimmons, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income Team, discusses the current state of the markets at the half-way point of 2024, and reflects on the changes and consistencies in the market since last year.

In this episode of The Weekly Fix, Ajeet Atwal, Portfolio Manager on the BlueBay U.S. Fixed Income Team, examines the supply and demand factors that are driving the ongoing strength of the leveraged loan market in the U.S.

Lower Credit Quality Securities. CLO portfolios and interest could be deemed by rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Other securities could have the lowest quality ratings or be unrated, have been downgraded or have been placed on “credit watch” for future downgrades. Lower rated and unrated securities can have large uncertainties or major risk exposures to adverse conditions and can be considered to be speculative. Generally, such securities offer a higher return potential than higher rated securities but involve greater volatility of price and greater risk of loss of income and principal. The market values of portfolios or interests in CLOs also tend to be more sensitive to changes in market or economic conditions than other securities. The value of the leveraged loans underlying a CLO can also be affected by changes in the market’s perception of the entity issuing or guaranteeing them, or by changes in government regulations and tax policies.

Leverage Risk. Leverage can result from certain transactions, borrowing and reverse repurchase agreements and derivatives. Leverage can exaggerate the effect of a change in the value of the portfolio’s securities, causing the portfolio to be more volatile than if leverage was not used. Losses incurred on leveraged investments will increase in direct proportion to the degree of leverage employed. CLO portfolios and investors also incur interest expense on borrowings used to leverage its positions. The use of leverage also can result in the forced liquidation of positions (which could otherwise have been profitable) as a result of margin or collateral calls. For CLO portfolios and investors, to the extent the Adviser can adjust leverage levels, the Adviser could increase (or decrease) leverage at times when it is not advantageous to do so and, as a result, the value of certain securities issued by the CLO could decrease.

BlueBay Head of US Fixed Income Andrzej Skiba discusses why slowing inflation may lead the way to rate cuts later this year and into 2025.    

• Current projections are for one rate cut expected this year and four in 2025.
• Before rate cuts commence, incoming data needs to further validate recent easing of inflationary pressures.
• Looking at the fixed income universe, we continue to like the front-end of the Treasury curve.