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The recent focus on inflation and monetary policy has turned the correlation between interest rates and credit spreads positive. This has a profound impact on the risk profiles of both investment grade and high yield corporate bonds. Before September 2021, when central banks acknowledged that high inflation was no longer 'transitory', rates and spreads were inversely related. IG investors were mostly concerned about rate risk with little or no consideration of creditworthiness, while HY investing was all about risk premia, with lower risk-free rates often offsetting widening spreads. In the current environment, credit portfolio managers need to pay equal attention to both components of fixed income risk and returns.

A better macro-outlook is expected even as US growth slows according to abrdn #investmentoutlook Disclaimer: Views are my own https://lnkd.in/dqMGW3p5 Here are the key takeaways: ➡️ Duration in sovereign debt including EM bonds and investment grade corporates preferred as multiple central banks expected to cut rates ➡️ Inflation expectated to decline to the central bank's target although there are risks and the last mile can prove to be sticky ➡️ DMs with better probability weighted macro-outlook to outperform, Mag 7 growth driven by solid fundamentals Are you bullish on long-duration bonds ? Let me know in the comments 👇 Thanks for reading. Follow me, Divit Sinha and ring the '🔔' for more.

At the most recent FOMC meeting, central bank policy makers communicated that the string of recent firm inflation prints have not fundamentally changed their outlook for inflation or monetary policy. The credit markets are not pricing in a contraction of growth. Although headline pricing across most sectors of the fixed income market appear rich, beneath the surface a very different story exists across industries, capital structures and sectors. Read our specialty fixed income outlooks for the 2nd Quarter of 2024: https://bit.ly/4b8PEWt

At the most recent FOMC meeting, central bank policy makers communicated that the string of recent firm inflation prints have not fundamentally changed their outlook for inflation or monetary policy. The credit markets are not pricing in a contraction of growth. Although headline pricing across most sectors of the fixed income market appear rich, beneath the surface a very different story exists across industries, capital structures and sectors. Read our specialty fixed income outlooks for the 2nd Quarter of 2024: https://bit.ly/4b8PEWt

The #neutralrate appears to have shifted higher. The neutral rate is the level of real interest rates at which central bank policy is neither stimulating nor restricting economic growth. For investors, higher yields should mean healthy levels of income in the years ahead, while providing a buffer against negative returns should yields drift higher still. If we’re wrong, and the neutral rate has not shifted higher, it could mean an opportunity for strong returns from fixed income investments. To read more, see our recent paper: The case for a higher neutral interest rate.

Goolsbee says it’s too soon to determine when Fed will cut interest rates. Chicago Fed President Austan Goolsbee hints at possible interest rate cuts this year if progress on inflation persists. The cautious approach aligns with the central bank's focus on economic indicators. 📉💼 #CBC_advisors #FedRates #InterestRates #InflationProgress #EconomicOutlook #FedPolicy #AustanGoolsbee #FinancialMarkets

At the most recent FOMC meeting, central bank policy makers communicated that the string of recent firm inflation prints have not fundamentally changed their outlook for inflation or monetary policy.  The credit markets are not pricing in a contraction of growth.  Although headline pricing across most sectors of the fixed income market appear rich, beneath the surface a very different story exists across industries, capital structures and sectors. Read our specialty fixed income outlooks for the 2nd Quarter of 2024: https://bit.ly/4b8PEWt

At the most recent FOMC meeting, central bank policy makers communicated that the string of recent firm inflation prints have not fundamentally changed their outlook for inflation or monetary policy. The credit markets are not pricing in a contraction of growth. Although headline pricing across most sectors of the fixed income market appear rich, beneath the surface a very different story exists across industries, capital structures and sectors. Read our specialty fixed income outlooks for the 2nd Quarter of 2024: https://bit.ly/4b8PEWt

At the most recent FOMC meeting, central bank policy makers communicated that the string of recent firm inflation prints have not fundamentally changed their outlook for inflation or monetary policy. The credit markets are not pricing in a contraction of growth. Although headline pricing across most sectors of the fixed income market appear rich, beneath the surface a very different story exists across industries, capital structures and sectors. Read our specialty fixed income outlooks for the 2nd Quarter of 2024: https://bit.ly/4b8PEWt

What’s in store for investors in 2024? And what investment opportunities should you consider, if you’re looking for #Growth, #Protection and #Stability? Consensus is that central bank policies are likely to maintain a tight rein over rates during the next two quarters as inflation eases – and we’ve arguably shifted towards a period of stability in terms of interest rates. This mix of stability and higher rates offers the potential for improved outcomes, provided if your portfolio is diversified. But what options do you have to achieve this? Find out in our 2024 outlook: https://lnkd.in/dryPYSmN #BetterWayToInvest