FICC

We present our Portfolio Allocation Summary for October 2023.

Special Report

After a busy month of global central bank meetings, and rising global bond yields, it is a good time to update our suite of Global Central Bank Monitors to assess the likely next moves from policymakers. The signal from the Monitors in all countries (outside of Japan) is consistent with the “on hold but higher for longer” messaging from major central banks like the Fed and the ECB. Only our Bank of Japan Monitor stands out as clearly signaling the need for tighter monetary policy.

A discussion of today’s FOMC meeting and its investment implications.

Top-down measures of nonfinancial corporate sector balance sheet health have been flattered in recent quarters by inaccurate data on interest expense. After correcting for the inaccurate data, we see that our best measures of corporate balance sheet health show a persistent steady deterioration.

The implications of this morning’s CPI report for Fed policy, Treasuries and TIPS.

In this report, we review our European fixed income strategy recommendations ahead of tomorrow’s critical ECB meeting

Our Portfolio Allocation Summary for September 2023.

US bond investment takeaways from this week’s PCE and employment releases.

We comment on Jay Powell’s Jackson Hole speech and recommend shifting to a barbelled allocation along the Treasury curve.

In this report, we assess the best opportunities in inflation-linked bonds in the major developed economies, based on trends in growth, inflation and the stance of monetary policies in each country. We conclude that the environment is turning more challenging for European inflation-linked bond performance versus nominal government bonds, while the opposite is true in Japan. In the US, US TIPS breakevens have likely peaked, particularly at the short end.