Relative Value of Fixed Income in the post Fed Tightening World
U.S. economic growth is clearly stagnating as the effects of monetary tightening work through the economy and disinflation could be the bigger risk by year end. Several indicators suggest an economic downturn is unavoidable and historical data will be used to show why interest rates will turn sharply lower in 2024. Empirical evidence suggests a recession is most likely to take place in the first quarter of 2024 with bonds outperforming equities over the next 6-18 months. Opportunities for investors to rotate capital across fixed income sectors and shift to areas with attractive risk/reward trade-off profiles will be identified.
Learning Objectives:
- Learn how the Treasury curve performs once the Fed goes on hold and why we hit generational highs on rates.
- Discuss why bonds are destined to outperform stocks over the next 6-18 months
- Understand how to identify relative value across sectors in fixed income
