The Fixed Income Channel

The Fed’s Balancing (Sheet) Act

The Federal Reserve’s September policy meeting played out largely as expected, as US monetary policymakers left the central bank’s benchmark short-term interest rate unchanged. The Fed did clarify when it would begin to unwind its hefty balance sheet, and updated its economic forecasts and interest-rate projections.

High Yield Market Update

The U.S. high yield bond market has grown substantially to around $1.3 trillion today. At the same time, the global high yield market has become more geographically diverse. North America’s share of the market has fallen from 87.1% in 2005 to 62.6% in 2016.

Myths and Misconceptions

History shows, and investment strategists tout, that small cap stocks are the best performing asset class. While small caps outperformed the runner-up, large cap stocks, over the last nearly 100 years, research has shown that the outperformance hasn’t persisted over all multi-year time periods and that the outperformance is concentrated in microcap stocks.

How to Trade in Today’s Placid Bond Markets

Today’s low bond market volatility won’t last forever. But knowing whether a correction will come next week or next year isn’t so important. Having an efficient trading strategy that can execute in both tranquil and turbulent markets is.

How the German Election Could Dictate Europe’s Future Direction

As Germany prepares to go to the polls in its general election, David Zahn, Franklin Templeton Fixed Income Group’s head of European fixed income, considers what the result could mean for Europe, the European Union and the eurozone.

The German Election and Markets

What might the German election mean for markets?

U.S. Debt Tops $20 Trillion - Stocks Soar To Record Highs

We touch on several bases in today’s letter that are not entirely related. We begin with the 800-pound gorilla in the room – the fact that the US national debt topped $20 trillion last week.

Are Diversifying Assets Up Next in the Return-Seeking Cycle?

After a sustained period of return leadership by U.S. stocks, a number of diversifying assets now appear poised for outperformance.

Time to Take a (Measured) Risk?

Astute investors know that buying when others are fearful can be a good strategy. Despite remarkably low market volatility, investors continue to avoid risk. This month, we examine previous periods of risk and investor behavior, when investors discarded normal valuation measures, threw caution to the wind, and suffered the consequences.

Worried About Rising Rates? Here’s Why You Shouldn’t Be

Should tighter monetary policy on both sides of the Atlantic worry bond investors? We don’t think so. Bonds have historically delivered positive returns when interest rates rise—particularly when they rise gradually.

What to Expect from the Fed's Balance Sheet Runoff

The Federal Open Market Committee is expected to begin the process of reducing the Fed’s balance sheet. Here’s what it may mean for investors.

Is Value Investing Past Its Prime?

Value stocks have underperformed most other styles of investing, as well as the broad market, by a wide margin since the beginning of 2015. We see several reasons why, which point to the catalysts for a potential recovery; we do not think Value is past its prime.

Generation Dove: The Fed's Norm for Nearly 20 Years

With the top two positions at the Federal Reserve soon to be open, Russ discusses how the easy money era goes back a long way.

Interest Rate Outlook: Long-Term US Rates Could Rise on Global Growth and Stabilizing Inflation

Invesco Fixed Income shares its views on rates around the world.

On My Radar – Forward We Go

Last week, investors were lamenting the lack of inflation. This week, they’re fixated on its rise. On Thursday, data showed consumer prices climbed 0.4% in August from a month earlier and 1.9% from a year earlier, a sign that inflation is once again on the upswing after months of soft readings.