Taxable Fixed Income 4th Quarter Commentary
February 03, 2017
This commentary reviews the previous quarter and discusses our outlook and investment approach for the coming months.
- Political surprises in 2016 marked the return of volatility to the markets. Performance in various investment grade sectors varied greatly, with inflation-protected securities outperforming Treasuries and lower quality segments outperforming investment grade corporate bonds.
- Our view is that the steeper yield curve has discounted much of the reflationary effects of the new administration’s policies. Policy uncertainty is a risk, however we remain positive on credit and fixed income overall.
- The prospect of corporate tax rate reduction, regulatory reform and increased fiscal spending offers great optimism for the economy and corporate credit, but the details and timing of policy implementation will likely drive performance.
- Corporate Credit Features: Financials, Energy, Healthcare, Information Technology.
Relative Value Features: corporate spreads, improved regulatory environment, Financials.
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