Here are the key takeaways from our latest Fixed-Income Outlook report:
- The complacent environment, characterized by low volatility and a scarcity of bonds to buy, is changing.
- The shift from quantitative easing to quantitative tightening took its toll in the first quarter of 2018 as rate, credit, and equity volatility all spiked.
- We expect more of the same going forward and are preparing portfolios accordingly.
- As we approach the turn in the credit cycle, our portfolio managers have been shortening portfolio duration, opportunistically moving up in credit, and maintaining a reasonable liquidity buffer for picking up undervalued credits in periods of market weakness.