The Weekly Fix

In this week’s episode, hear Brandon Swensen recount the events that have made 2023 a very exciting year for investors. 

Summary points:

• The year began against a backdrop of a resilient US economy but one saddled with high inflation.
• 2023 has included volatility from monetary policy, fiscal policy, domestic politics, geopolitics, and company specific events.
• Markets have rallied into the end of the year, supported by dovish Fed language and the increased chances of a soft economic landing.
• We believe that going into 2024 there is plenty of potential for volatility to re-emerge, but our base-case is for gradually falling inflation and rate cuts. 

Summary:

This will be a busy week in the market as investors look

to digest key data readings on key measures. 

BlueBay Institutional Portfolio Manager Stephen Fitzsimmons outlines the

significance of the news and our expectations.

Key points:

·        

Upcoming data releases will provide further

clarity to investors.

·        

We’ll see information on small business

optimism, retail sales, industrial production. 

News on inflation and the Fed rate decision will be particularly

insightful.

·        

We

think that the market’s enthusiasm for rate cuts next year is over-blown,

leaving room for disappointment.

Summary: The BlueBay US Fixed Income team is seeing strong demand in the secondary market for new corporate bond issuance.  Investors seem enticed by the high current coupons, the strong macro-economic background and the prospect of future rate cuts, explains Stephen Fitzsimmons.

Key points-

• High current coupons and levels of carry on high quality corporate debt are enticing to investors. 
• Recent positive developments on the US macroeconomic front are driving demand.  
• The market is also supported by the expectation of rate cuts next year, but there are risks to that projection.

Summary: Senior Portfolio Manager Tim Leary discusses how we’ve entered a quiet period for the markets as new issuance is low and there is little for companies to refinance. 

The key is to remain focused on the bigger picture.

Key points:

• We’ve entered a quiet time on the market calendar.
• There’s little new issuance or refinancing going on.
• We’re focused on the bigger picture of disinflation, healthy fundamentals and strong technicals.
• We are happy to let elevated interest income do its job.

Stephen Fitzsimmons discusses how the market was caught flat-footed by last week’s CPI data that was below expectations and markets rallied as a result.  

• Inflation data was announced as having been below expectations across the board.
• Meanwhile, retail sales showed material signs of cooling. 
• Interest rates and stocks rallied hard.

·        

There are significant reasons why we believe

bullishness in fixed income is still warranted.

Senior portfolio Manager Tim Leary discusses why public investment grade and high yield is attractive once again.

• It’s time to give public large, liquid, publicly traded corporate bonds a closer look in this low default environment.
• Yields are up, inflation has retreated, and the Fed is nearly done raising rates.
• You haven’t missed your opportunity to profit from the current environment.

In this week’s episode, hear Andrzej Skiba describe how a few economic data points and softer language from Chair Powell helped move yields back closer to 4.5%.

• Concerns about over supply and peak rates have receded. 
• We would argue that risks are balanced.
• While the Fed may decide to raise rates again in December, we do see evidence of a slowdown.

With so much clouding the investment picture at the moment, Tim Leary, BlueBay Senior Portfolio Manager at RBC GAM, goes off the beaten path to discuss an interesting corner of the market in the episode of The Weekly Fix.

With short-term rates holding many attributes in the current environment, Stephen Fitzsimmons, BlueBay Institutional Portfolio Manager at RBC GAM, discusses how to enhance your portfolio with current coupon Agency mortgage-backed securities on today’s episode of The Weekly Fix. 

In today’s episode of The Weekly Fix, Tim Leary, BlueBay Senior Portfolio Manager, acknowledges the importance of the rise of geopolitical risk. And while that macro narrative continues to garner headlines, earnings season has kicked off. Four of the eight largest US banks have reported, and the numbers have come in better than expected. Time will tell, but financials seem to have the situation under control.