Morgan Stanley IM: An Age-Old Question – Can the Market Handle Higher Bond Yields?
Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer, Global Balanced Risk Control Team, shares his macro thematic views on key market drivers.08.08.2023 | 06:50 Uhr
- One would think that as we near the end of the Fed rate hiking cycle that bond yields would be falling steadily, so, why isn’t this so?
- We believe it’s because the end of the policy hiking cycle does not mean the Fed will start cutting rates right away.
- Yields can no longer be relied upon to trend lower like they did for the past 40 years .
- Investors, not just in fixed income, need to realize bond returns may not be the stable and steady anchor to volatility as they once were in the traditional, passive 60/40 equity/bond allocation.
- Our goal has been to control for risk across our asset allocation strategy between fixed income and equities, and this remains the case today.
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