As the US Fed takes its foot off the rates pedal, the timing of the end of the US cycle remains uncertain. In this environment, preparing for opportunities later in 2019 is the objective.
Headlines on consumer delinquency have taken a negative spin. Recent auto delinquency data is at near-peak levels despite today’s low unemployment. But it’s important to examine exactly what is being reported as “delinquency” when reviewing the data. By Michelle Russell-Dowe, Head of Securitised Credit, US Fixed Income and Anthony Breaks, CFA, Portfolio Manager
Although the Fed has softened its stance and the labour market remains tight, the outlook for a strong US rebound in growth remains muted. Coupled with European elections nearing and anticipated slower growth in China, the outlook is neutral and portfolio decisions continue to prepare for what may come next.
It may be easy to say in hindsight, but fixed income did its job in 2018. Despite the naysayers, fixed income delivered solid positive returns to investors against negative returns from equities and many other assets. Fixed income is alive and well.
The recent indication that the US Fed will slow rate rises may prolong the cycle, yet it is still late-stage and our portfolios and strategies reflect that, with expectations to add duration throughout 2019.
We take a closer look at how asset-backed securities can be used as a defensive asset for those seeking stable income in today’s investment environment. Michelle Russell-Dowe Head of Securitized, US Fixed Income
"Through the looking glass" is an expression that is today used to mean something on the strange side, in the twilight zone, or in a parallel world. It comes from Lewis Carroll's novel Through the Looking-Glass and the strange and mysterious world Alice finds when she steps through a mirror. The term can also be used when examining the role of hybrids in the investment world, given the number of issues facing them at the moment.