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Accept Decline
by  BlueBay Fixed Income team, A.Skiba, CFA May 2, 2024

Quite a lot has changed this year in terms of market expectations. Strong macro-economic data has applied upward pressure on yields and market participants have continued to discount interest rate cuts. “Higher for longer” may become the new base case. Andrzej Skiba, Head of U.S. Fixed Income and BlueBay Senior Portfolio Manager at RBC GAM, discusses how investors will adjust.

Watch time: 52 minutes, 41 seconds

Key Points

  • It’s difficult to sustain a narrative that inflation is headed back towards the Fed 2% target. The reality in the data is that there is no evidence that the US economy needs lower rates any time soon.

  • We continue to be more cautious on the outlook for longer-dated bonds, as investors have been reluctant to move out the yield curve.

  • As consensus thinking is challenged, the future can appear more uncertain, bringing volatility.

  • From our perspective, dislocation creates opportunity.

  • Active management where you manage the credit and rate risks in your portfolio separately is key.

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