We are moving to a more constructive stance towards credits within the Fixed Income space.
We think higher Quality Corporate bonds offer a better reward/risk profile now.
There are three Ds that are ruining the Fed’s little rate hike plan: the Dollar, Disinflation, and the Decline in wealth effect.
It’s too early to move back into credits; we recommend a defensive stance within the Fixed Income space.
Despite more attractive value now, we expect volatility and near term headwinds to persist.
1) Why The Big Sell-Off In Stocks? 2) Why Didn’t Interest Rates Go Lower? 3) Why Was The Dollar Weaker?
We expect volatility to persist in the near term as the market deals with uncertainties surrounding the Fed rate hike decision and China. A defensive stance is recommended within the fixed income space.
The overall widening trend in the last year has not shown any sign of reversing.
Re-deflation is the period where reflation gives way to deflation or disinflation. It has been so prevalent that it triggered a new “Higher Risk” signal in our Risk Aversion Index.
The re-deflation theme has been so prevalent that it triggered a new “Higher Risk” signal in our Risk Aversion Index. There are significant negative implications for all risky assets.